Yahoo was the first big name in Internet search. Since it started in 1995, Yahoo almost became synonymous with the World Wide Web, and soon lorded the search market. Even before half of the world’s current 500 million Internet users even knew what WWW is, Yahoo was the Internet’s most popular and most visited Web site. Its strength was such that Yahoo! survived the dotcom bubble in the late 90s and early this millennium, selling shares at a high of $118.75 per share, a fate not shared by virtually 99% of dotcoms.
Over the years, however, a combination of bad business decisions, complacency and bad management has sunk Yahoo. Internet search, its core business and former dominion, is now undisputedly ruled by Google. A lot of its investments and spin-offs have not made a dent in the Internet market. Co-founder Jerry Yang has been booted out as its CEO, along with thousands of employees who were similarly laid off over the span of 13 years.
More telling, however, is the drop in Yahoo’s 2007 net income, which is roughly only a-third of its 2005 figures!
How Would Yahoo! Survive?
What Yahoo needs now is to refocus on its core competencies: advertising and search. As much as Yahoo hates to admit it, Google’s customers were its former customers. Yahoo failed to capture and hold on to both its searchers and its advertisers. They lost a majority them to Google.
What’s more, Yahoo has acquired or launched a lot of services over the past years: Flickr, Yahoo! Pets, Del.icio.us, to name a few. Aside from taking away focus and money from its search business, Yahoo still has to find a way to integrate these into its search, or at least find a way to make sense of each service and package it as a whole. Each service has to add some degree of value to its search business. Those that do not, would just have to be discontinued or sold to other companies.
Yahoo also needs to STOP experimenting with its dwindling supply of money. If it is going to invest, it should be in something or in a market that it already has experience in.
Lastly, Yahoo needs to stop competing with the rest of the computing world. Instead, it should focus its energies on Google and Microsoft.
To do these, however, Yahoo needs solid leadership to give it direction and make sense of it all. With Jerry Yang gone, Yahoo needs someone who could easily fill in Yang’s shoes.