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Summary:

Yahoo CEO Marissa Mayer told attendees at the World Economic Forum that the key to the company’s future success is partnering with other players like Apple, Google and Facebook. But is that a future worth betting on?

Marissa Mayer at Davos

According to attendees at the World Economic Forum in Switzerland, the venue for Yahoo CEO Marissa Meyer’s interview on Friday was so packed it was standing-room only, and demand for the livestream crashed the feed. And what was the recipe for success that everyone was so keen to hear about? According to Mayer, the moribund portal will come alive again not by its own hand, but by partnering with everyone else — i.e., Google, Apple and Facebook. Yahoo’s CEO is clearly trying to make a virtue out of the company’s weaknesses, but it’s hard to see how that is a winning strategy.

In the interview with Bloomberg (which is embedded below), Mayer listed all of the things that Yahoo doesn’t have — including any proprietary hardware, software, an operating system, a social network, etc. (she could have added a search engine as well, since Yahoo has outsourced that to Microsoft) — but tried to argue that this was actually a benefit, not a disadvantage:

“Given that we do not have mobile hardware, a mobile OS, a browser, or a social network, how are we going to compete? I think that the big piece here is that it really allows us to partner… we work with Apple and Google in terms of the operating system. In terms of social network, we have a strong partnership with Facebook. We’re able to work with some of these players that have a lot of strength in order to bolster our user experience that we offer on the Yahoo site.”

Why would Apple or Google care about Yahoo?

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This is a valiant effort on Mayer’s part, but what exactly does Yahoo have to offer Apple or Google in terms of a “partnership” around their operating systems and platforms? The web portal may still have millions of visitors a month who come to its news pages or other sites, but how does any of that benefit Apple or Google? Are they going to pay for access to that? Unlikely. Do either of them — or Facebook for that matter — really care about whether they get anything from Yahoo? Also unlikely.

In her reply to another question, Mayer said that one of Yahoo’s strengths is that it is a player in all of the things that people like to do on their smartphones, whether it’s email, weather, news, photos or sports scores. Those daily mobile habits, she argued, are the key to Yahoo’s success:

“When I thought about the strategy for Yahoo I pulled the list of what people do on their phones in rank order of frequency. If you ignore a few exceptions… the list looks like e- mail, check the weather, check the news, share photos, get financial quotes, check sports scores, play games. The nice thing at Yahoo is that we have all the content that people want on their phones. We have these daily habits. I think whenever you have a daily habit and providing a lot of value around it, there is opportunity to not only provide that value to the end user but to create a great business.”

It’s true that Yahoo still has plenty of users who have Yahoo email addresses, check Yahoo News, share photos through Flickr (especially now that it has an actual usable mobile app) and look at sports scores or go to Yahoo message boards. But it’s also true that these numbers have not been growing very much at all lately — if anything, they have been shrinking, as other players like Google and Facebook and Apple (Yahoo’s alleged partners) carve away the businesses that Mayer is describing. What kind of future is that?

Yahoo’s goal is the same as everyone else’s

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Mayer also talked about how the key to Yahoo’s strategy around these daily habits was to make sense of all the data about people’s activities and use that to show them relevant content — in other words, the exact same thing that Facebook and everyone else has their eye on. Yahoo may want to be the “Google of content,” but so does Google. The big problem for Yahoo is that there’s no reason to believe it can do a better job at this than any of those other companies, who have more data and more resources to devote to doing so.

Compounding that problem is the fact that Facebook and Apple and even Google are becoming less likely to want to share their data with others, not more. Facebook has been busy for some time cutting off access by outside parties, and there’s no reason to think that will stop — and while Yahoo may currently have a contract that gives it access to the Facebook graph (a prescient deal it signed in 2009), that contract comes to an end fairly soon. So what does Yahoo do then?

Mayer may be staking her future on the idea of outsourcing everything, but it is not a new idea at Yahoo: it is the same kind of approach the company has been taking ever since it decided to turn its search engine over to Microsoft. What does Yahoo actually own? Some pageviews and daily visitors (although it is mostly renting them, not owning them). The problem for Mayer is that the value of that asset is declining rapidly, and it’s not clear what replaces it.

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  1. In all fairness to MM, what other option does she have? Yahoo are the Nokia of web services.

    1. I agree — and perhaps there is no other strategy at this point. But that doesn’t mean it’s going to work.

    2. Yup exactly MM ‘strategy’ is to partner with everyone then see what sticks ;)

  2. Yahoo needs to go back to looking at Microsoft buyout.

  3. Yahoo should establish its online credit business first. Cashless technology is future of developed society.

  4. Whenever I hear someone hang the future of any company on partnerships, I know they are doomed. Partnerships are to corporate strategy what meetings are to getting work done — they usually hurt more than they help. The only real partnership that works is customer-supplier, and that’s what Yahoo should be looking at. They have two constituent customer groups: consumers that use their services, and advertisers that reach out to those consumers through them. They need to focus on these groups and make the experience better for them. Streamline and focus – pick a few key areas (maybe it’s mail, maybe it’s news, maybe it’s sports) and then become truly innovative – both for consumers, and also for advertisers.

    Meyer needs to realize that Yahoo is a software company, and then get her team innovating on software. They are not a content company, and there is no such thing as a “partnership” company.

    1. Exactly. I’m not your partner. I offer this service or make these things for you and YOU pay ME for either or both of those things. You are not my partner, you are my customer.

  5. Right. Google, Apple and Facebutt (not a typo) will partner with Yahoo! right up until they figure out to do what Yahoo! does for them better on their own. If Apple is willing to (try) and dump Google maps…….

    I’m just sayin’. Here’s the thing. Her thinking is progressive. The technoverse would thrive much more if Amazon stopped trying to be Google, Google stopped trying to be Apple (and vice versa) and Facebutt (not a typo, again) stopped trying to be everybody. Google does software excellently. Apple does hardware great. Amazon has nailed e-commerce. When each of these companies sticks to what it knows, consumers benefit. So MM wanting to partner is actually the right idea. Too bad divergence and “walled gardens” are so en vogue right now.

  6. It’s a good start. Apple and Google partnered together to create iPhone and look now 6-7 years later.

    1. Apple partnered with Google to create iPhone, are you out of your mind? Apple created iPhone and used Google’s mapping data for maps and Apple designed and coded the maps app as well as youtube app. If you dont know the facts better shut your mouth.

  7. To rephrase Om from some time ago:
    Be careful which platform you’re building on

    The platform is more and more becoming data and as Apple with Maps has hopefully learned it ain’t easy. Design and UI don’t count if you don’t understand/own the data you’re building on.

  8. If that is the best you can do on Yhoo problems, I would worry more about gigaom future than yhoo. Hope Mathew has second job.

  9. Millions of page views. Millions of users. No social network. No platform APIs on core services like sports and Flickr. Seems like Yahoo doesn’t have the people to execute. Or Marissa doesn’t see it. Or she does have the people and she sees it but culture can’t move fast enough to capture the obvious ops.

    I want Yahoo to succeed, but for the sake of innovation my advice is to get out of the content business and double down on the platform business.

    Power the advertising and CMSs of newspapers. Invent a new mobile OS. Do something bold.

    Not sure it’s in the DNA as a public company.

    So, I’m out of ideas.

  10. Hi,

    All the current largest web companies got there largely by leveraging API’s, and then later, in some cases, retrenching access, what have Yahoo! got and done?

    If anyone who reads this also can get access to MM, can you please tell her to buy WhatsApp – I can’t think of anything else that would give them a footing to even give them an opportunity to regain its previous importance.

    There’s other things it could do, share of mind around innovation, mobile, content and global content breadth…..

    Yours kindly,

    Shakir Razak

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