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Yahoo must look for the next wave to ride

india Updated: Sep 11, 2011 22:06 IST
N Madhavan

Last week, Carol Bartz, the CEO of Internet media giant Yahoo, lost her job unceremoniously, as she was fired over the phone by her board. It symbolised deep trouble for the company, which 15 years ago was the hottest alongside browser firm Netscape in the world of the Internet. How did the two slip off their pedestals?

In the case of Netscape, it was a case of predatory smartness shown by Microsoft, which despite regulatory battles, used its clout as the provider of the famous Windows platforms to bundle and promote its own Explorer alongside.

In the case of Yahoo, it seems, the company has been too much of something like a supermarket, without making much of its own stuff. It was a leader in search thanks to its partnerships with AltaVista and Inktomi but once Google emerged, it lost that part of the game (folklore has it that Google wanted to sell its stuff to Yahoo but emerged later as a standalone giant). Yahoo was a frontrunner in email (it still is a key player) but Google offered Gmail with enormous memory and rode the next wave.

Under Bartz, Yahoo partnered to enable people to log in with their Facebook IDs and also forged a partnership with Microsoft's late entrant search engine, Bing.

But one thing stands clear: Yahoo's own core leadership has been in banner advertisements, while search stole the march in a big way. Google search and Gmail have clearly pushed ahead, while Yahoo, which once turned down a takeover offer by Microsoft, has been a victim of its own pride and inability to ride the next big wave.

Where does Yahoo go from here? I think it still is a strong company, but is isolated in a world where search and social networking have pushed ahead. The key mistake the company has made is in being slow to embrace emerging trends. For instance, it could have been what Facebook became, if it had spotted the opportunity in social networking.

In the Silicon Valley, they say life is full of hills and valleys. You look for the next hill to climb.

My guess is that Yahoo has not truly made use of the user generated content revolution while remaining more of a piggyback firm on content creation. It must look for the next hill to climb.

Associated Content, an acquisition it made, seems to have some steam there. Unique content will continue to be valued on the Net.