Yahoo is here to stay.. or is it?
Yahoo is facing a really bad time.. with its revenues going down quarter by quarter.. wall street is losing faith. But yahoo is such a giant.. I think Yahoo is here to stay.. or is it?
Read the wired article on how yahoo blew it. There are various interesting points to note.
First, which is not entirely a news, but Yahoo has been conservative in various acquisitions.. But I dont see it as incompetency of its execs. No one can justify the price tags for these hefty acquisitions.. YouTube going out for 1.65 B. Its valuation is far smaller.. Paying myspace 1 B just for serving ads.. Google current revenue through myspace is perhaps 10% of this price tag.
But you still have to do it.. As it turns out, this industry happens to be the one where winner takes it all. To emerge as winner, you have to consolidate, and kill competition. That requires very bold moves, and confidence of investors in your crazy decisions.
Second, acquiring two pieces of code doesnt imply you can now have both. Yahoo acquired inktomi and overture.. But it took a long time before yahoo could integrate them both.
Third, systems are often overhyped for their value.. This was true in overture's case.. While it was the best ad serving system, it was not ready for the global scale yahoo wanted to deploy it on. It required various re-engineering before yahoo actually started making money out of it.
The current problem yahoo is facing is because it doesnt have an equivalent of adSense. Google makes 20 cents per search.. Thats a lot of money. Yahoo has been developing Panama for a long time.. but its still not ready. I really wish it works, and produces great results. Because, even for a "winner takes it all" industry, it is important that there are more than one player.
Something that strikes me most is.. today people are so comfortable and talking so freely about advertising as source of revenue.. In general, I would imagine people to be critical of search companies for showing advertisements, and making money out of it. I find the comfort of costumers and analysts with this business model very surprising.
Read the wired article on how yahoo blew it. There are various interesting points to note.
First, which is not entirely a news, but Yahoo has been conservative in various acquisitions.. But I dont see it as incompetency of its execs. No one can justify the price tags for these hefty acquisitions.. YouTube going out for 1.65 B. Its valuation is far smaller.. Paying myspace 1 B just for serving ads.. Google current revenue through myspace is perhaps 10% of this price tag.
But you still have to do it.. As it turns out, this industry happens to be the one where winner takes it all. To emerge as winner, you have to consolidate, and kill competition. That requires very bold moves, and confidence of investors in your crazy decisions.
Second, acquiring two pieces of code doesnt imply you can now have both. Yahoo acquired inktomi and overture.. But it took a long time before yahoo could integrate them both.
Third, systems are often overhyped for their value.. This was true in overture's case.. While it was the best ad serving system, it was not ready for the global scale yahoo wanted to deploy it on. It required various re-engineering before yahoo actually started making money out of it.
The current problem yahoo is facing is because it doesnt have an equivalent of adSense. Google makes 20 cents per search.. Thats a lot of money. Yahoo has been developing Panama for a long time.. but its still not ready. I really wish it works, and produces great results. Because, even for a "winner takes it all" industry, it is important that there are more than one player.
Something that strikes me most is.. today people are so comfortable and talking so freely about advertising as source of revenue.. In general, I would imagine people to be critical of search companies for showing advertisements, and making money out of it. I find the comfort of costumers and analysts with this business model very surprising.
posted by Govind Kabra at 10:25 PM
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