Dirk Knemeyer

The future of Yahoo!

The future of Yahoo!, March 10, 2006

A short comment contextualizing the prediction could go right here

Do they have any bloody clue how to build their brand? Looking at their different product acquisitions over the last couple of years, they don’t even understand how to integrate those products into their suite. de.licio.us has no visible connection to Yahoo! on its homepage or registration page. Flickr does not advertise the Yahoo! connection, but does attempt to get users to synthesize their Flickr ID with their Yahoo! ID. Meanwhile, Upcoming.org has a prominent “a Yahoo! company” mark in the upper right hand corner of its site. Any of those three strategies can work, but Yahoo! needs to pick one. What does it mean for a product or company to be part of the Yahoo! family? How do they fit into the overall suite? Is it better to let smart and well-branded products continue with the successful market approach that led to Yahoo!’s buying them for, or should the strategy be to slowly buy and integrate the products into a core suite, in the process working to upgrade the company brand perception and value of the suite through having some of the most useful applications on the web all working together?

I don’t have the right answer; both are valid directions to take. But what Yahoo! is missing is a direction. It is completely scattershot. As a result, this sexy little triumvirate of acquisitions – which should be relatively simple to vision and execute a limited brand strategy for – don’t even seem to have a consolidated direction. As a result, the mental model for customers and the market is one of a very disorganized “all things to all people,” further perpetuating their Wal-Martization.

And here’s the tragedy of the whole thing: Yahoo! has all of the pieces in place to really dominate the Internet. They have a user base across product categories that makes Google swoon. They have products for nearly anything people would want to do on the Internet (and some of these products are even good). But there is not a clear strategy (or, at least, the execution of whatever strategy that might exist is a clear failure). Many of their products are workmanlike at best and unusable at worst. On one hand they have a consistent platform and suite, while on the other hand there are outliers all over the place (Geocities, anyone?) that no longer make any sense and are confusing to customers. Most damning of all is that the design of the basic suite is mediocre and does not engender interest, much less excitement, in customers.

[…]It might be a bitter pill to swallow, but the result will otherwise be that Yahoo! serves as the proverbial Wal-Mart of the web. And while that rather blunt and unsophisticated market approach might work in the commodified world of big box retail, it will only continue to make Yahoo! vulnerable to an increasingly broad Google, an increasingly web-centric Microsoft, and any of the thousands of young, lean, hungry, brilliant technology companies that are building amazing things and gearing up to eat Yahoo!’s lunch. The approach of buying those hot young companies will only work if their integration into the Yahoo! product suite or use as a stand-alone product in the overall corporate portfolio follows a sound strategy. And so far, it just isn’t happening.