In this excellent article on O'Reilly Radar, Mike Loukides is disappointed that Twitter has choosen to harden third party apps to access its API. A number of these provided little or no value-add on top of Twitter own interface - and these are the services that Twitter wishes to eliminate from its ecosystem.
Every service and brand MUST be able to manage its user base / user experience. Asking permission is a key part of playing in the ecosystem. Just because the end service to the user is free doesn't mean that some sort of throttle is morally wrong.
Personally, I think Twitter needs to focus on revenue: improving the quality and reducing the number of satellites will make revenue extraction easier. Arguably, it runs the threat of spurring users to churn to a competitor.
Competitors to Twitter
And, as I keep on saying, there doesn’t appear to be a viable competitor to Twitter yet – and I don’t know why: the service is deadly simple.
We, at Midentity (my own (now failed) start-up) , built Twitter in a morning out of the infrastructure that we had already built in 2003. We had developed a group SMS service, Micircles (here's our home page on the WayBackMachine . A little known fact is that Tweets are limited to 140 characters so that they could fit in an SMS message which is 160 chars max.We couldn’t see how we could make money out of the service – so we didn’t launch it.
Do believe that if a competitor arrives on the scene, then Twitter will fragment – as everyone will realise that it is the individual (ie identity) that is the important thing, not the service.