The End of Yahoo as We Know It
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News Commentary. Yahoo's appointment of Carol Bartz as CEO is great news for Microsoft. Whether or not Microsoft gets its Yahoo search deal, the media company is finished. |
[Editor's Note: I've got lots of topics to cover today, but also Windows 7 Beta 1 testing to continue. Posts will be shorter than usual.]
Carol's credentials are all wrong for Yahoo, unless the company is planning a major makeover. That won't be easy. There's too much former Yahoo CEO Terry Semel stamped onto the company's character. He succeeded transforming Yahoo into a media giant, in many ways to a fault, and that character won't easily be changed.
On Jan. 9, I bought a new VAIO laptop. Sony's portal provider: Yahoo, which also is the Web services provider for my AT&T U-Verse TV service. Yahoo is everywhere there is content and media. Some stats:
- Yahoo is second-most visited Web site, measured by monthly unique visitors (Nielsen Mobile).
- Yahoo Mail is most-accessed Web site from Mobile phones in United States (Nielsen Mobile).
- The Yahoo ad network ranks second in unique U.S. monthly visitorsthat's ahead of Google (ComScore).
- Yahoo ranks second in search sharegranted, way behind Google (ComScore).
Yahoo is a consumer media company, but Carol is all enterprise cred. She led Autodesk and worked for both Digital Equipment Corporation and Sun Microsystems. DEC might as well be a segment on the VH1 show "Where Are They Now?" Sun is a new segment in the making. Sure, Autodesk is successful, but in a specialized, niche market. Going from Autodesk to Yahoo would be like changing from governor of Rhode Island to president of the United States.
Sorry, but Yahoo is too big for Carol to run, which gives her plenty of reasons to do what cofounder Jerry Yang couldn't: cut Yahoo to pieces. There's some strange thinking inside and outside the company that Yahoo must be smaller to competethat portions must be jettisoned. Sure, Yahoo could trim some fat, like any company, but I hear repeated calls to cut off limbs.
Terry isn't given much credit for making Yahoo into a media company with strong brand awareness and affinity. Sure, Terry blew search, letting Google race ahead. But Yahoo's brands and services are everywhere. Yahoo is a feel-good brand, too. In November 2008, I asserted that the brands would be more valuable than Yahoo search to Microsoft. Yahoo is a globally recognized brand, and one that people will want to trust, particularly during hard economic times when other Web services may close up shop.
If Carol cuts up Yahoo, its brand value must diminish. About as important: Yahoo's many media and content partnerships, which would be severed and wither if Yahoo jettisons many services. Yahoo's one tangible asset is its size and reach, from which there remains the foundation to build a stronger company leveraged off its brands and partnerships.
The question lots of people are asking this week: What about Microsoft and a search deal? I'm sure that Microsoft wants Yahoo search, which would be absolutely stupid for Carol to give up. Yahoo and Microsoft could both gain from the kind of search sharing deal Yahoo sought with Google. But Yahoo can't sell off search and survive. A Microsoft-Yahoo search deal would put Google on notice, and, if done right, better leverage both partners' Web real estate.
Something else: Yahoo already has lost some of its best talent. I expect even more defections. Kara Swisher's post on Carol's ascension to CEO of Autodesk in 1992 is revealing. Kara focused on similarities between Autodesk then and Yahoo now. But I latched onto something else: Carol's management style, which is very different from how Yahoo is run. Can you say culture clash? Corporate cultural conflict can only lead to more talent exiting the company.
Transformation is inevitable if:
- Carol runs Yahoo the way she did Autodesk
- Yahoo sells off valuable services or brands
- Microsoft gets search
- Carol caves to short-term investor demands
It's all good news for Microsoft, which is better positioned to pick up partnerships and customers than Google. Microsoft and Yahoo operate in many more of the same segments and compete more as brands than do Google and Yahoo. Without a search deal, Microsoft isn't as likely to grab Yahoo search share as Google.
[Please send your tips or rumors to watchtips at live.com]


Comments (14)
Oops. Sorry. I must have logged into Yahoo Watch by mistake. The web site says microsoft-watch but it's obviously a phishing attempt to further drive down the value of Yahoo.
Posted by InquiringMind | January 14, 2009 8:07 PM
I can't think of a compelling reason Yahoo HAS to sell its search operation to M$. In my opinion, the whole company is worth more than the parts, simply because it doesn't make sense to break it up. There's too much brand value in Yahoo, so they need to either sell out completely to M$ or acquire AOL. The later makes a lot of sense if Yahoo's board wants to take an incremental approach to building the brand. In some respects, it makes sense for M$ to let Yahoo acquire AOL, continue to build their online technologies, and then decide in a couple of years what to do about Yahoo. In any situation, they will continue to loose search to Google, which simply has become synonymous with Internet searches.
Posted by Jay | January 14, 2009 8:20 PM
Joe, you go ahead and enjoy Windows 7, I know how you feel. Its so COOL! You should check out MCE, I love it!
Posted by Andre Da Costa | January 15, 2009 1:02 AM
I am a regular reader of MSFT watch and I am so disturbed by "Andre" comments here all the time. He looks like a spammer and MSFT watch should adapt Digg style comment system. His comments will always score highest negative points.
Joe,
I urge you to introduce comment rating system like Digg which could save your readers time so that they don't need to read spam.
Posted by crux | January 15, 2009 3:37 AM
@crux - I'm with you
@joe - how many corp's have you run Joe?
Joe's comment about the RI governor is reminiscent of what folks said about an Illinois state legislator back in 1860. That guy had previously failed, twice, to even get elected to the US Senate. He was also one of the best Presidents that US has ever had, many would argue -- the best.
And what I ask would better qualify Steve Ballmer to run Yahoo than Carol Bartz.
Disclosure : I knew Carol back in her DEC days, my recollection is of a smart, efficient and straight talking operator.
Posted by RightPaddock | January 15, 2009 4:28 AM
Joe;
I agree with "Crux" on that one.
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You may not know it, and I'll be the first to let everyone at Microsoft Watch be on the "inside" track of what is really going on between Yahoo and Microsoft.
I received an email yesterday morning from Steve Ballmer of Microsoft and this is a direct copy/paste from my wonderful MS Outlook Email:
Dear Draoi:
The reason I am personally writing you is to thank you for your previous inquiries on what is really going on with Yahoo and us here in beautiful Redmond, WA.
As you suspected, we've been working very close with the Yahoo Corporation in the eventual acquisition of their company. Carol Bartz is now the new CEO of the company. We are very proud that Yahoo has selected her in this position. We believe that it is move is ultimately in our best interest.
We also like to thank Jerry Lang for stepping down, and again, as you suspected, allowing Carol Bartz, our ringer to take over and assume his role with this company that we will certainly acquire.
With the down-turn of our economy, we are assured with with the highest expectations that Bartz assuming the position (no pun intended) that we should pick up Yahoo in a mater of a quarter or two after the "dust settles" and allowing Bartz to run it into the ground nose first as they say.
I will assume that you will keep this information to yourself. As a man who personally shook Gate's hand, I will also assume that you can be trusted.
By the way, you should be receiving the brand new laptop specified in our agreement pre-loaded with the "optimized" Windows 7 operating system.
I personally ask that you adhere to the EULA agreement and do not show any benchmark performance information publicly.
Since this laptop and like so many others we send out to our clandestine Shill operatives, this "optimized" version is so enhanced and above and beyond anything that we would ever sell to the public, and that you keep all this information strictly confidential.
Enclosed, you will find a binding legal contract and waiver that you must sign when you accept this gift from us.
I also would require that you would write a few, as you put it, "mind-numbing" comments on Joe Wilcox's Microsoft Watch Blog, and several others as well on how much you truly enjoy the latest from Microsoft in the Desktop arena. Any of these great comments, factual or not, would be greatly appreciated by me, personally.
I am also included the additional requirements as you requested of 2,000 shares of Microsoft in this package, enjoy!
Steve Ballmer...
P.S. Will you be up this way in the Spring, hope to have some time to tee-up and golf with you again.
Posted by Draoi Dubh | January 15, 2009 4:34 AM
Addenda
Before Sue Decker, the retiring president of Yahoo, became the Yahoo's CFO back in 2000 she was an analyst at Donaldson, Lufkin & Jenrette, who are a long gone French & then a Swiss owned, investment banker.
If an analyst from a defunct foreikgn owned investment bank can run a media company called Yahoo, why can't the CEO of a successful software development corporation!
Posted by RightPaddock | January 15, 2009 5:22 AM
@InquiringMind - rofl
@Andre Da Costa - rofl
@crux - rofl, his comments will score highest positive points :P
Posted by puppet | January 15, 2009 8:16 AM
Come on guys, Andre's one of the funniest posters on this board, almost as funny as I-Man. They don't use alias's so they are easy to skip if they disturb you.
Originally Yahoo was a great web portal, an interesting entrance way to the wonders of the web. However the web and browsers have moved on and I don't think such a thing is really so important now. MS has the same problem that they try to drive everything through their MSN portal (or whatever its called now). People don't seem to want or need this, they can bookmark their own web pages or their browser can do it for them, like Chrome's simple memory of your most visited web sites that it displays as your home page. I still use quote.yahoo.com for stock prices, but that's about it, and if it disappeared it would be easy to switch to any of a number of other services.
Posted by smist08 | January 15, 2009 11:41 AM
@Draoi
LMFAO
My gosh, what an imagination. I caught the link from "chips" that seemed a little unnerved by what you wrote. Keep it up, love your style of humor.
Posted by Tim | January 15, 2009 7:12 PM
@Tim
Thanks, I also realize that people may cry buckets over what I wrote here or do not have the grasp for my humor such as in the person you've mentioned. I really don't care, I just don't.
Posted by Draoi Dubh | January 15, 2009 8:49 PM
Sorry Draoi I think Ive misunderstood you.
When you made the post suggesting Linux (or Ubuntu) needed a major marketing push to directly compete with MS, was that your humor again?
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I thought you simply didnt understand the ethos of open source. ;)
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I like a laugh as much as anyone else, and whilst I think your career as an online comedian has someway to go, you know what they say, practice makes perfect.
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Quote "I also realize that people may cry buckets over what I wrote here"
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No dont worry about it I dont think anyone did, we've seen it all before. Just dont create multiple accounts to say it, otherwise you may find your posts deleted (its happened before)
Posted by Goblin | January 15, 2009 9:07 PM
@Golbin;
Now you're accusing me of multiple accounts? You may need some serious and professional help. I will have you on ingore from here on out. I can see you have some problems, not to mention one of them being paranoid.
Posted by Draoi Dubh | January 15, 2009 9:57 PM
Quote Draoi "Now you're accusing me of multiple accounts? "
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Er No, Im not. Unless of course you think my comment of "just dont create multiple accounts to say it, otherwise you may find your posts deleted (its happened before)" is accusing you of such. I thought it advises you not to, not says you have. Since we've seen no duplicate posts under different handles then Id tend to say you havent. I hope thats clear. This is a little bit like when you claimed I called you a shill. Ive yet to see you quote me where I did.
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I dont need to push the point further because if people are that interested in who is telling the truth, they simply need to look themselves.
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Quote "I will have you on ingore from here on out. I can see you have some problems, not to mention one of them being paranoid."
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Yep the insults again. However since its established you misread my comment (which Ive quoted) maybe we can agree that Im not. Are you still ignoring me?
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Draoi, I dont expect to have to speak with an adult this way, and your behaviour in throwing insulting and then an attitude of "im not talking to you anymore" is similar to that of a child. Please, lets debate, isnt that what this site is about?
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If you really want to throw a playground tantrum at your own misinterpretation do you have to do it here?
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Anyway, since you were being playful with Tim in regards to your "humor" I didnt get the impression that you were taking many things seriously. (FYI thats not an accusation, thats my observation)
Posted by Goblin | January 16, 2009 3:58 PM