Wednesday, October 11, 2006

Yahoo's troubles

Saul Hansell at the NYT tells us that "At Yahoo, All Is Not Well". Some selected excerpts:
Yahoo would seem to have a strong hand. It is the world's most popular Web site, with more than 400 million monthly users ... But in recent months the company has suffered some embarrassing setbacks.

From video programming to social networking -- areas of interest to users and advertisers alike -- the company is losing its initiative. And each time a product fails in the market or is late, Yahoo loses some ability to do more deals and hire more talented employees.

Yahoo has been stymied because its text advertising business has been largely frozen until it completes a new software system. The upgrade is more than a year late ... Yahoo's [old] system produces much less money from every page than Google ... Google has $11 billion in cash and a market value of $131 billion, while Yahoo has $4 billion in cash and is worth $34 billion.

Current and former Yahoo employees say the company has been bogged down by bureaucracy and internal squabbling .... Companies that try to do deals with Yahoo also say they find it to be slow, demanding and inconsistent in negotiations.

Yahoo's faltering image and plunging stock price may also be hurting its ability to recruit talented people ... Yahoo's existing employees are grumbling that with the stock price so low, many of their options have become worthless. Some Yahoo veterans have bolted for trendier start-ups.
Of all the problems at Yahoo, I think the lengthy delays in competing against Google AdWords and AdSense are the worst.

The business is advertising. It is not tagging, sharing, chatting, or socializing. Ads drive everything. To fail to compete on advertising is to fail.

For more on what Microsoft and Yahoo should do to compete with Google, see my previous post, "Kill Google, Vol. 3".

For more on the failure of Microsoft and Yahoo to compete with Google, see my previous posts, "Yahoo and MSN cannot compete?" and "Yahoo gives up?"

Update: John Battelle says, "The main issue dogging [Yahoo]: its lack of a monetization engine as efficient as Google's ... If Yahoo is going to compete against Google ... it has to get search monetization up to snuff."

4 comments:

Tide (Adam MacDonald) said...

Funny/Ironic isn't it that no one ever mentions AOL in those comparions? I wonder in Yahoo is becoming AOL-like after all. Can they articulate their strategy?

Meme chose said...

What AOL and Yahoo have in common is most importantly that they are run by people from the entertainment industry. Google has been eating these guys for breakfast since day 1.

All of Google's product proliferation has been worthwhile, if it has taken Yahoo's eyes off the development of its contextual ad system (as, apparently, it has). It's a fantastic ploy to dance a bunch of fairy lights in front of a slow-witted opponent while you swing the punch to his nose.

Kevin said...

I totally agree..... I think it's their BIGGEST problem to date and one they apparently don't want to do anything to solve. I've heard excuses but they're all pathetic.

The YPN team needs to get with the program ......

Thomas said...

Semel is not a visionary leader nor has any technology chops. Post bubble, he stabilized the place, laid off a bunch of people and as advertising recovered, profited from it. But lack of vision and lack of technology prowess meant that, to hold power, he created process and bureaucracy. It always happens when leadership doesn't have a fundamental connection to the operations of the business. You are always running scared that someone is taking advantage of you, so you create process to address your personal insecurity.

Brin, Page and Schmidt are not afraid of engineers, so they are much more natural. Their blind spot was the social side of things, which explains MySpace, YouTube etc. in each of those markets Google competed (half-heartedly in Orkut's case) but lost. At least they ponied up for YouTube.

Yahoo needs a new leader who combines technology insights with social network thinking. I don't know who that would be, but Semel is not that leader. Perhaps Jeff Bezos, if he could be induced?

The longer Semel stays, the more damage he would do to Yahoo.

Switching topics, is it just me or is eBay also smelling of decay and death lately? Meg Whitman is the luckiest person on the planet - not in a million years could she have *come up* with eBay but she was smart enough to ride it. I have no respect for her management style and thinking, and the next 2-3 years will prove me right :-)