Is Yahoo! Getting Its Groove Back?

Published on Author Eli Fennell

After years of languishing in the land of the tech has-beens, Yahoo! is suddenly a hot topic of discussion again.  Agree or disagree with the direction they’re taking, if you’re at least talking about them (and saying anything but, “Hey, remember when Yahoo! used to matter?”), that’s probably more than you’ve thought about them in a long time.

Marissa Mayer had a lot to prove when she took over as CEO.  The task was never going to be easy, and she’s been under scrutiny for nearly every decision she’s made since assuming control, from improving the employee perks (e.g. free lunches), to killing the work-at-home option, to “spring cleaning” (killing or unifying many of their products), new partnerships (e.g. Google and possibly Apple), and product beautification.  More recently her acquisitions have been under the microscope, including Summly, OnTheAir, and Tumblr.

For the past few days the big news has revolved around two products: Tumblr, the social blogging service that is eating Facebook’s lunch with teens and Millenials, and Flickr, the social photo sharing service acquired by Big Y! in 2005 (and then, sadly, left to languish).  Tumblr, of course, is a new acquisition for the company, and one analysts will be watching very closely to see if Yahoo! can avoid ruining the brand and perhaps even help it grow market-share, mind-share and revenue.

Meanwhile Flickr, after years of being on virtual life-support, received a major overhaul yesterday, with a beautified site, an elegant mobile app, and a tempting 1 Terabyte of free storage for full resolution images and HD videos.  There isn’t a free service out there to compete with this, it is a disruptive offer reminiscent of Gmail’s 1 Gigabyte of free storage in the days when most email services offered only Megabytes of free storage.  If nothing else this stands a good chance of forcing competitors to race to offer a similar value (and, being realistic, may be more than many competing services can hope to match).

Investors are noticing as well, and they like what they see. Whether consumers will notice this new Yahoo! remains to be seen, but if the Tumblr and Flickr moves are any indication, there’s a good chance many will before long.  The next year or two will likely tell us much about the success, or failure, of these moves.

There is still a lot to do, and here are some areas where I think Yahoo! must make strong moves to ensure they become relevant again in the world of consumer web technology:

1) Simplified Product Line: Search for Yahoo on the Google Play Store right now and you will see the telltale signs of product fragmentation on bold display.  For example, I count no less than 6… 6… different sports apps, 5 of which are “Fantasy Sports” apps (the remainder is a sports news apps).  There should be, at most, 1 Fantasy Sports app that covers all bases.  I could give other examples, but that should suffice as an example of spreading themselves thin.

They should also take a lesson from Google’s Unified Log-In approach with Google+ (the unified ecosystem, rather than the Social Stream in particular).  Google+ Log-Ins make transitioning between different parts of the Google ecosystem fairly seamless, and more recently across third-party websites, apps, and games.

2) More Beautification: Yahoo! has been doing a good job of beautifying their landing page (on desktop and mobile), their email service (on the web and the app stores), and Flickr, but there are many areas where its Web 1.0 legacy still show through, for example the Yahoo! Instant Messenger, or Yahoo! Profiles.  Every product that isn’t set to be killed or integrated into another product should get a modern makeover, and the company must commit to regular improvements rather than allowing products to languish for years without evolving and improving.

3) The Cloud: Yahoo! was a cloud company before most people had any idea what the cloud was.  1TB of Flickr storage is a good start, but Yahoo! needs to bring that same sort of disruption to the Cloud Drive market, a market where even the biggest players tend to offer, at best, 50-100GB of free space (and even this is rare).  Storage space isn’t the only piece of the puzzle, either: they need to offer a suite of tools for editing and collaboration on things like Documents and Presentations.  A “Y! Drive” with 1TB of free storage, even if this includes Flickr pics and videos, could seriously disrupt the current market.

4) Mobile: Yahoo! is improving their mobile offerings, but still has a lot of work to do in this area.  For example, Yahoo! News lacks a decent mobile app in the Play Store, or even a decent mobile site.  Meanwhile Google News, which isn’t even a source of revenue for the Search giant, can at least boast a decent (though not superlative) mobile site.  They must ensure that all of their core products have great mobile apps and websites, and will also need to add some new killer apps to their lineup sooner rather than later, if they are to compete in a market likely to overtake desktop over the next several years.

5) Search: This should be obvious for Yahoo!, once a search giant themselves but now reliant on Microsoft’s also-ran loss-leader Bing, despite it not paying out as promised.  Divorcing Bing, however, will not be easy.  As +Joe Wilcox of +BetaNews says, “Fracturing Bing and Yahoo could create more opportunities for Google, and during the transition lead to even greater market share gains.”

Instead of an outright divorce, Yahoo! may need to consider new types of Search deals whereby, as soon as their current exclusive deal with Bing ends, they provide much of their own Search service, perhaps focusing on their core strengths (entertainment, sports, finance, etc…), while making deals with multiple partners to augment their weaknesses, possibly through a bidding process.

This could allow them to let Bing perhaps handle some aspects of search, Google perhaps others, possibly Yelp still others, while avoiding the regulatory scrutiny of an exclusive Google deal or the financial uncertainties of an exclusive Bing deal.  Perhaps Bing handles mapping, while Google handles shopping, or vice versa.  Perhaps Yelp handles the local search.  Perhaps they could also align themselves in at least some areas of Search with Apple, providing some of the back-end for Siri for example.

There are certainly other areas where Yahoo! could stand improvement.  For example, they would do well to build or acquire a browser able to gain at least a respectable market share, Opera for example, so that they can have more influence over the direction of web development.  These are just some areas that remain uncertain for now.

If Marissa Mayer can pull off a strong recovery for the once mighty company, pulling them from the market quicksand they’ve been stuck in, she will have earned the respect she deserves throughout the industry, but more importantly, she will have helped restore much needed competition, a win for both her company and consumers.  That is why I am rooting for them to get their groove back, more than anything, and why you should, too.

I love technology and how it changes our lives. There’s something almost spiritual about how new technologies connect and empower us. And it’s really cool, too.

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Eli Fennell

I love technology and how it changes our lives. There's something almost spiritual about how new technologies connect and empower us. And it's really cool, too.