Yahoo committed seppuku today

That's good I might use that on my blog - don't like this horrible, barely readable colour scheme; subscribe to my mailing list or feed and get the content in a readable format!

wglb• 17 years ago

Sort of a self-downmod font, don't you think? What you said, but I think pompous and self-serving. And possibly wrong.

TallGuyShort• 17 years ago

I'm really surprised about Yahoo's market share. I've generally found it a lower quality search than both Bing and Google, and other than this deal I haven't heard anyone talk about it at all. I know a lot of people that have their home page set to MSN by default, but I haven't heard of Yahoo being someone's homepage in years.

What's everyone else's experience with this? Does anyone here use Yahoo, and if so, why?

michael_dorfman• 17 years ago

I don't use Yahoo search, but my start-page is MyYahoo, and has been for eons. Because of this, a fair bit of the news I read is via Yahoo's aggregators.

zmimon2• 17 years ago

Anyone who uses Yahoo mail gets Yahoo news, sport, weather etc. shoved in their face every time they check their mail. From there people are linked into a network of stuff including search.

And Yahoo mail by the way is massive - I can't remember the actual status but they are a multiple of any of their competitors in size and google is a tiny small fraction. I think people underestimate the importance of this just because email isn't seen as sexy these days - but it's eyeballs, and very sticky ones (sorry for image :-) ), they come back regularly again and again - people with lots of history in their Yahoo mail are pretty much never going to leave.

bkovitz9• 17 years ago

"Innovation is all you have"? Microsoft has never innovated, not even at the beginning. Many big players in many industries have never been innovators.

These guys have something else: a strong bargaining position. "Innovation is a fleeting advantage." Cornering a market, setting up barriers to entry—those are time-tested and effective ways to make serious money.

hyperbovine• 17 years ago

Thank you. I can't count the # of times I've heard Microsoft described as innovative. Yet, nearly every time they try to innovate they fail. MS Bob anyone? Or how about that home automation pitch they made in the late 90s? Or Cablesoft / MS Media Server. Nearly every single one of their successes came from copying the competition (XBox, Windows) or through acquisition (Frontpage, Hotmail). And a lot of their failures (Zune, Vista, Win7 TBD) came from un-successfully copying the competition. Office is home grown, makes a lot of money and seems to innovate on its own, but it seems like the exception to the rule.

bkovitz9• 17 years ago

It's part of the mythology of American capitalism: if they're a big winner, they must be a big innovator, because innovation drives the economy!

Don't get me wrong, I love American capitalism, and I don't think innovation trumps all other factors (like reliability). The myth of Microsoft innovation is just one of those peculiar cultural myths that, in this case, blocks out the reality for people who don't work in the field.

evgen• 17 years ago

The counter-point to that is to recognize the fact that Google has had only three real innovations that worked over the course of its entire existence and it has been been almost five years since their last hit. All of the big players seem to be throwing darts at the innovation wall and taking long lingering looks around the room to see whose ideas they can copy. This is nothing new, but please don't suggest that Microsoft is the only company stuck in this position.

RyanMcGreal• 17 years ago

Microsoft was innovative in one way: the cheap, permissive licencing model they adopted for DOS is the reason it became the de facto standard for PCs.

bkovitz9• 17 years ago

This is a good point. Microsoft has guts and even some creativity when it comes to marketing.

Tichy• 17 years ago

That's just bullshit. They produced their products like everyone else, and as a result built thousands of little innovations into it. Windows is not a cheap OS X clone (and thank god for that, here's to choice). Yes, they also copied successful concepts. So does everybody else.

If Microsoft is so bad, why is everybody buying it? The "shady business practices" theory is just too easy. And even if that was the only reason: I guess then they innovated in the sector of "shady business practices". They certainly did not become so big through sheer luck.

bkovitz9• 17 years ago

This deal is the most demoralizing news I've heard in a long time. It calls for some kind of ritual lamentation. Any ideas?

noonespecial• 17 years ago

"Bing, bang, bung". Said in a sad, whimsical voice as one shakes one's head and turns away.

scott_s2• 17 years ago

Honest question: why do you find it demoralizing?

messel2• 17 years ago

I'm guessing that he dug Yahoo in the old days much like myself. Kinda weird seeing them working a deal with MSFT. I guess Google needs some competition in search.

bkovitz9• 17 years ago

Because the Microsoft Way is to give top priority to holding on to the high-leverage point in a market, and to do the lowest-quality engineering they can get away with to hold onto it. Their internal culture favors mediocre work as long as it's done fast and the testers don't find too many bugs.

Search is now one of the highest-leverage points in the world economy, and it will become more important as time goes on. Microsoft having their claws a little deeper into search means they will use that position not so much to give people everywhere access to information, but mostly to help other Microsoft ventures grab and hold market share against competitors.

bjplink2• 17 years ago

The very first thing I thought of when this deal was announced was how similar it felt to how Google first got traction by lending their technology to a Yahoo "front-end." This feels like throwing the baby out with the bath water all over again.

I don't normally agree with Calacanis (although it's hard to argue with his success) but he's dead on about this I'm afraid.

jasonmcalacanis2• 17 years ago

Note: It's actually OK to agree with me 38% of the time (i.e. the actual percentage of time I'm correct).

bjplink2• 17 years ago

For what it's worth, 100% of my fear wasn't about you being right but about Yahoo being officially dead.

hymanroth6• 17 years ago

Is you real or is you fake?

sachinag• 17 years ago

I think he's incredibly wrong, and I'm surprised by it because he founded Weblogs, Inc. and should know better.

Yahoo is now a media creation and curation company. Yahoo Sports is number one, Yahoo News is top five (HHS Secretary Sebelius had an exclusive op-ed in YN yesterday), OMG is killing TMZ and others, and so on and so forth. Yahoo's strategy of original content and great curation is all about stickiness. Let's be clear - Yahoo will still sell the very best ads for themselves, and Microsoft gets that sales expertise as well. No one on the face of this earth sells premium online ad space better than Yahoo.

Yahoo has clearly decided that they won't play in search any more, and that's a rational decision - they only played in search for a small period of their history. They were powered by Inktomi before Google, and now will be by Bing for the next ten years, and presumably something other than Bing after that.

alaskamiller• 17 years ago

It was clear that Yahoo never planned on being a search company when they passed on buying Google. And you're definitely right: Yahoo operates much better as a destination site. But in terms of media creation, Terry Semel and his Hollywood crew was brought on for that and it was just a waste, treading waters, not grabbing YouTube, not grabbing Facebook, flubbed on creating a better search ad product, etc.

They should have just worked it out with AOL last year.

jamesk24• 17 years ago

Just looking at the homepages of Google vs. Yahoo - it's clear that Google's focus is search. On Yahoo's home page, search is just a feature on a page littered with tons of bandwidth hogging widgets.

But Bing is clearly a search engine. That's the central focus and that's what people will remember. It might not be "top of mind" for most of us but it's going to be top of mind to a lot of Yahoo users soon enough.

The market's immediate reaction: "Yahoo Shareholders Transfer $2.9 Billion To Microsoft Shareholders" - http://bit.ly/yn2TT

hymanroth6• 17 years ago

Fantastic analysis. But where's the money? The point of Calcanis' piece is that the Borg only gets (buys?) its way into markets which are big or growing.

Whilst there is no doubt Yahoo is strong in some areas, he's saying Yahoo has thrown-in the towel in the big fat one. He argues that Yahoo had more than one chance of being a player in search and each time they fluffed it. All the current focus-on-core-strengths talk doesn't cover up the fact that they blew the big one. That's his point, and I think it's a very valid one.

rabidgnat• 17 years ago

"But where's the money?"

It's not in search, as far as Yahoo is concerned. Having gigantic teams dedicated to tweaking search algorithms and running servers was obviously not working out to Yahoo's advantage in the long run... they were losing market share to Bing, and who knows how much they were spending to try to innovate in search? As far as I know, they've been losing money on searching for a long time.

Is Yahoo ever going to be rolling in money again? No, and maybe not ever. However, they have a metric ton of products that can generate revenue: commercial licenses for service APIs, cloud computing resources, etc, and now they'll be focusing more on their advertising (which is REALLY where the money is these days). As far as staying afloat as a company not raking in the big dollars, this was probably the best bet without some major upheaval. They can focus and develop and sell things that actually might have a chance at making some money.

jamesk24• 17 years ago

Bing on Yahoo search results pages is a product endorsement. Users will become familiar and comfortable using a Bing branded product. Bing Sports is a text ad on the current "sports" search results page. It'll go from, WTF is Bing to, "oh Bing, they have sports news"

It is like BMW switching to Toyota engines and putting a little sticker on the dashboard that says Powered by Lexus. How long will BMW last when that happens?

gtzi• 17 years ago

"It is like BMW switching to Toyota engines and putting a little sticker on the dashboard that says Powered by Lexus. How long will BMW last when that happens?" Could not have said it better.

froo2• 17 years ago

"It is like BMW switching to Toyota engines and putting a little sticker on the dashboard that says Powered by Lexus. How long will BMW last when that happens?"

Unfortunately, that analogy just doesn't work in the car industry. People will still buy the BMW because it is a BMW.

To back it up, I'll give you a two real world examples, both to do with another car Manufacturer - Porsche.

When Dr Ferdinand Porsche first created his company, his Porsche 64 was created using many parts from the VW Beetle.

From my personal experience, back in 2002, I was helping my brother strip down his 1986 Porsche 944 turbo to be raced in 03.

While pulling the car down, I noticed that many of the parts were manufactured by Audi and VW (which admittedly owns Audi). Even while we were stripping the sound proofing material off the body, I found out that the body of the car was manufactured by Audi, which to me was very surprising (given the body was one of the main selling points of the car at the time, even Mazda ripped off the design for the RX7).

If I had to give a rough breakdown in parts, I would have said that particular model was a 3-way split when it came to who's parts were in the car.

As for Porsche's company performance, they are one of the strongest car brands worldwide and definitely one of the most profitable, in 07 having made 5.8 Billion Euro profit off of 7.3 Billion Euro in revenue.

Currently, the only thing that is causing them headaches is their financial acrobatics, not the fact that their cars are made out of other manufacturer's parts.

So unfortunately, your analogy just doesn't hold up.

krschultz• 17 years ago

That happens all the time. Pop the hood on a Mazda 6 - there is a Ford motor inside. GM and Toyota built cars in the same factory (albeit, its shutting down now).

symesc• 17 years ago

"Yahoo is now a media creation and curation company"

Oye. Isn't that what AOL was?

c00p3r• 17 years ago

So, there are just Google and Microsoft, and that is very good for Google, because a good karma matters!

And where is Apple with "the search for rest of us"? =)

TweedHeads• 17 years ago

Jerry Yang would have never sold out.

Now this newcomer gets greedy, some money exchanging hands under the table and now Yahoo search is dead.

Carol Bartz? she will be forgotten quickly.

vijayr• 17 years ago

suicide? how?

which is better? giving up the areas in which yahoo can't win, getting a good deal in return and concentrating on the areas they are strong in or trying to fight a losing battle, sinking millions of dollars in the process?

His logic seems to be 'search is very important so yahoo shouldn't give up its second place'. It doesn't matter search is uber important, what matters is whether yahoo can keep its place. They certainly feel they can't, so its very sensible to get out before the going gets really bad.

good business is all about deciding which areas to play, and knowing when to leave

papa• 17 years ago

I agree with you, but imho Yahoo should have made these decisions years ago. Yahoo has clearly made a lot of bets it hasn't been able to follow through on (acquisition bets alone tell a sorry tale: Broadcast, Geocities, Inktomi, Overture).

When I was at Yahoo during the "dot bomb" crash. Yahoo was scrambling to decrease its reliance on advertising and made a big push into premium/paid subscriptions. Well that fizzled. As did Terry Semel's entertainment strategy and the subsequent attempt to go toe-to-toe with GOOG.

Personally, I like the entertainment/media portal strategy (out of the remaining options available). But at this point it still feels like Yahoo is being pushed into this strategy rather than boldy pushing forward with it. I think that's partially why it feals more like defeat/retreat at this point than anything else. Present-day Yahoo just can't shake that feeling of failure/lost opportunity in the eyes of many observers. That's gonna hound them for a long time until they can garner up a bona fide hit.

Ardit20• 17 years ago

"Chapter three will be the two-horse race of Microsoft and Google"

Starts singing - - - I'm so excited.....

Dude, Yahoo search was dying anyway, which is a shame because people like Yahoo, it's just that they have not been advertising so much. Like google had the benefit of viral marketing, to counteract it, Yahoo should have aggressively marketed itself to put its name out there. I mean, people in Europe probably hardly know of Yahoo compared to Google, which I do not think is true in the US.

So, in an ideal world I would have liked the Yahoo search brand to be kept, but the brains behind it to be of microsoft. This way, if played right, there could be a serious competitor and who knows we may get a 60 - 40 market share, and in that dream world, the publisher, or the user would hold the power.

As a side note, interesting that although Yahoo stock has gone down around 11%, Microsoft's stock has barely moved, I would have expected it to shoot up.

rythie• 17 years ago

Is tweaking some complicated algorithm, really innovation anyway?

I think Yahoo are better off leaving this problem to Microsoft. People don't tend to call Microsoft innovative and search is an established place that they want to be in - this is normal behavior for them. Microsoft are in a good position for doing search by acquiring powerset and other companies (as Jason mentions). Microsoft this more so they can compete with Google directly and Yahoo have better sense. Yahoo is doing stuff that neither Google or Microsoft do well, like Flickr, Del.icio.us, News and other content.

Innovation from the customers point of view would come from improving the interface to search, which Yahoo can do without doing the algorithm themselves.

If look at what they offer with the BOSS and search monkey APIs http://developer.yahoo.com/search/ Yahoo is keen on this direction. At the Yahoo Hackday London in May they were pushing these APIs with talks and handing out documentation etc.

thomasfl• 17 years ago

In ye olden days, before google, yahoo was the search that returned the best results ordered by relevance. They had to create their index manually to do so, but it kind of worked for a while.

ErrantX• 17 years ago

> Microsoft does not enter a market unless it’s important, huge and on the way to becoming even bigger.

Wait? So they've only just entered the search market? hmmm.

Ramblings methinks.

jalammar• 17 years ago

With Twitter’s repositioning as “real-time search”, and search becoming a two-dog race, both Google and MS must be salivating to buy Twitter. I wouldn’t be surprised if either of them laid down 1+ Billion to get ahead under these circumstances.

Yahoo committed seppuku today

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