About Yahoo!

By Ronnie Rocket

Yahoo! is a true Internet company. Microsoft is not. Yahoo! is working on a turnaround strategy to make the company more profitable. Microsoft is sitting on a bundle of cash and needs to buy into the web 2.0 sphere. Is it a good idea if Microsoft buys Yahoo!?

For Yahoo! the advances are obviously the strengthening of its financial powers, but also access to the massive costumer base, that are not being offered any genuine web 2.0 services by Microsoft.

For Microsoft it could be the massive take-over that finally takes the company from the old world into the web-driven technology scene, where the jawdropping Facebook investment stands out as more desperate than strategic. Former world dominator Microsoft is watching Google taking over the world through a fast Firefox browser.

Some news about Yahoo! founder and interim CEO Jerry Yang's effort to streamline and boost the Yahoo! shop can already be found in articles and blogs. It looks like these services will be cut off:

• Yahoo! Photos
• Yahoo! Music
• Yahoo! Auctions
• Yahoo! 360

From the same sources the following focus areas are listed:

• Yahoo! Portal
• Yahoo! Search
• Yahoo! Mail
• Yahoo! News

Let me comment on these rumours first. Cutting off the original photo service is logical, since Yahoo! is market leader with the Flickr service. Owned by Yahoo!, Flickr is the reference online photo service and is to photos what YouTube is to video. The music war is a tough one to go into with Apple setting the pace and Amazon fighting back. Probably not a good idea to go into that one right now. Ebay is another true Internet company that owns the auction platform, the Internet payment system (PayPal) and the Internet telephone company (Skype). Hey, there's an idea: Yahoo! merges with Ebay to create a true Internet powerhouse! Finally, closing down Yahoo! 360 will probably not affect a lot of users since this social network initiative is a secret to most.

Let us look at the four key focus areas. The portal is back. The battle for the ownership of the start page in the billions of browsers is on. And Yahoo! is a serious contender here. Go for it. Search is the heart of the Internet and Yahoo! has been there from the beginning. Search will be more specialized in the future (Wiki Search, Music Search, Video Search). Yahoo! will find a search niche, where they can deliver premium results. Web mail are moving from consumer to business application and Yahoo! can deliver a strong alternative to Hotmail and GMail. Yahoo! has a strong e-mail product (but a poor IM app). Finally, increasing investments in news services are instrumental in winning the portal slash start-page battle. All in all it looks like good old Yahoo! has a bright future ahead.

However, there are other business areas, which are really interesting, when we are discussing the future of this pre-dot com company:

• Delicious 2.0
• GeoCities 2.0
• Mobile Services
• New Markets

The Delicious application is the de facto standard for social bookmarking on the web. It has enormous potential and expectations for Delicious 2.0 are skyhigh. Remember GeoCities? It is a consumer website-in-a-box solution, that Yahoo! bought years ago. Should it stay or should it go? Maybe it is time to rethink this concept and come up with a serious contender to Google Apps? The future belongs to the mobile and Yahoo! should move fast and furiously in this market. Microsoft and Google will battle it out with Apple and others in the OS area, but users don't care so much about the technology inside the phone. The care about the information that is outside the phone (on the screen, in the speakers). This is where Yahoo! comes in. Finally, the fact the Yahoo! Japan is the Internet player in the world seconds largest economy - at least at the time of writing - should be used as a springboard into the New Markets, primarly China and India. If you are a player here, you are a player everywhere.

Conclusions to this brief analysis of the Yahoo! dilemma are:

• The portal is back
• The battle for ownership of the startpage has started
• Web Search, Mail and News will be specialized
• Everything has a social dimension
• Content is king, Mobile content, that is
  
• The Internet is a global phenomenon (duh!)
  

All the best and good luck to Yahoo! in the future. We are many who grew up with Yahoo! and I think most of us would like to see Yahoo! as a strong, self-contained company in the future.

(Oh, and if someone from Yahoo! reads this: please update your IM service. It stinks. Really, it does.)

Ronnie Rocket is the founder and chairman of SIGNAL DIGITAL, the first web agency in Denmark. Established in 1995 the company delivers web 2.0 consulting and solutions based on open source platforms and open standards. The company is based in central Copenhagen.

UPDATE!
Sramana Mitra over at GigaOM just published a related blog focusing on buying targets, M&A's and numbers in general.

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