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According to attendees at the World Economic Forum in Switzerland, the venue for Yahoo (s yhoo) 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 (s goog), Apple (s aapl) and Facebook (s fb). 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 (s msft)) — 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?
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
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.