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Yahoo at Number 2: Strategy or Surrender?
January 24, 2006
It's probably an understatement to say that Susan Decker has had better weeks. Yahoo's Chief Financial Officer likely wasn't too happy that even though revenues increased 39% from last year, the company's stock dropped 13% when earnings fell short of forecast by one cent.
But that was just the beginning. In a Seattle Post-Intelligencer article earlier today, Decker more or less condeded the battle for search market share to Google.
So in case you still haven't read it, here is Decker's money quote:
We don't think it's reasonable to assume we're going to gain a lot of share from Google. It's not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share.
It's been the buzz all day long, and very few of the many stories have been favorable.
First, I'm with Microsoft's Scoble in wondering whether "Yahoo’s CFO gave a quote that’s now being used out of context."
Second, what would we prefer she have said? Last week's search engine market share numbers tell the story: Yahoo is Number Two (and very good at it, as Greg Boser might say). Right now, it has very little hope of beating Google, and very little worry of losing to MSN. (And don't expect those numbers to move much. Check Danny's 2005 timeline - how's that for stasis?)
Would search enthusiasts (or "the Street") have been happier with a little chest-thumping like Microsoft's Steve Ballmer did last summer, promising to match Google's relevancy in "six months"? Here's a quick history lecture. No one believed it then, and six-and-a-half months later, no one believes it now. Will any loyal Yahoo Search users actually abandon Yahoo because of this? (Common sense says no, but there's no accounting for media bloggers.)
Third, does Yahoo even consider search its top priority? Search is an integral part of its list of services, but its groups, news, email, and many other services make it one of the world's biggest brands. To paraphrase one comment at Scoble's blog, a pure search engine like Google sends you away, and a portal like Yahoo sucks you in. Some people make reasoned arguments that Google could take a lesson from Yahoo's model and re-allocate some eggs into alternative, revenue-bearing baskets.
UPDATE: Here's a passionate response from Qi Lu and Eckart Walther, both VPs of Yahoo Search.
All posts by Erik Dafforn
posted by Erik Dafforn at January 24, 2006 11:56 PM
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