Yahoo! has apparently read the writing on the search wall that everyone else (except Microsoft) has been reading for years: The search game is over and Google has won.
"We don't think it's reasonable to assume we're going to gain a lot of share from Google," Yahoo! CFO Sue Decker said in a Bloomberg article on Jan 23. "It's not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share.''
Decker and Yahoo! get points for self-assessment and straightforwardness. And as neither she nor most of the company's current senior managers were there when Yahoo! fumbled the search ball back in the 90s (to go chasing after content and other seemingly sexier pursuits), it seems pointless to reiterate how disappointing this is, that the search game was once Yahoo!'s to lose.
Still, denial never helps, so hats off. Now, if the folks up at Redmond can only follow this example, perhaps Yahoo! and MSN can combine forces and become a stronger No. 2.
UPDATE: Upon further consideration, I think this comment was probably intended to reset Wall Street's expectations. The Street has been all over Yahoo about search for the last year, and the company's repeated promises to "fix the algorithm" have only created more disappointment. So Decker was presumably just resetting the bar to a level the company can more easily clear. (Judging from recent market share losses, though, even this target may be hard to meet.)
Interesting take, but I am not convinced Yahoo! should be completely written off in terms of search. Even if Yahoo! maintains a strong number two showing, that will only compliment their strong "stickiness" of the other services offered.
Personally, I think Google search is better, but I can not bring myself to switch my homepage from Yahoo!, which I have tried several time, I keep going back time and time again. I would venture to bet I am not along in this - and Yahoo! knows it.
While Google is good, history has shown that the best stumble. I was reading an article online somewhere that Yahoo! is beating Google in the race for social networking & social search. I don't know much about it, but it could be interesting to see in the long term.
Keep the insights coming.
Posted by: Ryan | January 24, 2006 at 12:47 PM
I definitely don't think Yahoo! should be written off in search. As Sue Decker put it, though, I would be pleased and relieved if they could just maintain market share. Based on most of the data I've seen, they've lost share every quarter, including this latest one. And if the search market isn't to go the way of online auctions (effective monopoly), that trend has to stop.
Posted by: Henry Blodget | January 24, 2006 at 01:51 PM
Just today I published a Yahoo! Company Profile on my blog TheNewWallStreet.com. I mentioned the fact that they are second in the search industry, and I continued to write that this is not of major concern. They are diversified to the point, that they attract visitors with their content, services, and Web 2.0 initiatives. They are a firm second in the search field, far from an after thought, but can be successful focusing their business elsewhere. Check out my post and feel free to leave a comment... www.thenewwallstreet.com
Posted by: The New Wall Street CEO | January 24, 2006 at 02:02 PM
Leaving aside the question if the search competition is over (I dont think it is), it is certainly a good thing to be realistic internally and in making strategic decisions at the managment level. I am just not so sure it is great to say it publicly. I would imagine this would be pretty dicouraging to hear if you are on the Yahoo search development team, or really anyone inside Yahoo. It also cant help retaining or attracting top search talent. I would bet there is some significant damage control going on in the Yahoo R&D organization today.
Posted by: Nabil | January 24, 2006 at 03:10 PM
PS - Maybe this is a trick to get Google to relax and let its guard down.
Posted by: Nabil | January 24, 2006 at 03:14 PM
Sue Decker is about as smart as they come. This said, I doubt it's a "trick" to get Google to relax so much as an attempt to manage Wall Street expectations. The Street has been all over Yahoo about its relative search incompetence, and Yahoo has spent the last year promising to "fix the algorithm" and give Google a run for its money. I suspect the new strategy, with respect to Street communications, is to try to set the bar low and then clear it easily. The trouble is, given recent trends, I don't think it's going to be easy for Yahoo to even maintain share.
Posted by: Henry Blodget | January 24, 2006 at 04:20 PM
It's only a matter of time before China funds a search engine company that will reduce Google to rubble.
Posted by: JD | January 24, 2006 at 04:43 PM
Yeah, but I'm not exactly sure that it matters that much either. Yahoo's future lies in a different place, as the No1 destination site /portal.
And they'll get a chance to reinvent the search game around social networking.
I believe both Yahoo and Google have great futures but also different futures.
Posted by: techboard | January 24, 2006 at 04:54 PM
I am a little bit puzzled as this is a comment by their CFO and not by their R&D chief, Dr. Prabhakar Raghavn. In any case Yahoo lacks innovation.
Posted by: patil | January 24, 2006 at 05:35 PM
One thing I learned long ago is never assume. Oh, and never think the trend will continue. Oh, and and and.
The reality of the internet business is that change is at lightning speed. Just a handful of years ago, how many people had heard of Google? I am far from an internet neophyte yet I never really started using Google over Yahoo for search until after the IPO. Now we are writing off Yahoo, Microsoft and any potential innovators. Hmmm. Maybe.
I am a little less sanguine about Google, Yahoo and the sorts than others. How good a CEO is Semel? How capable are the Google founders? Yesterday Semel was a genius now two geeks are the geniuses. The reality is neither likely fit the label. Yahoo was the anti-Microsoft force. There was literally little, if any, well funded competition. So they thrived. Did they make the right decisions, have a good business strategy and execute extremely well? It appears not. Because all it took was a second well funded competitor to eat their lunch in a period of a few short years.
Now, we look at Google. At least they are focused. That's a hell of a lot more than I can say for Yahoo. What does Yahoo really want to be? I do like looking at the hot chicks on their Personals. But, I just look at the pictures. I don't spend any money. Back to Google. Focused. They do one thing. I could argue they do it better than anyone else but they aren't particularly good at it. Not search. What they get paid for. And while I love the Google work environment they have created, I'm not sure the founders are really proven business strategists or executives. Diller says they fell into this and had a back up plan to sell the business for a song if things didn't work. So, is Diller telling the truth? Or are Sergey and whatever his name is really brilliant? I'd argue as business people, they don't seem to be. What experience do I have making that statement? I've spent the majority of my career advising Fortune 500 C-level execs on business strategy and transformation. I'm no rocket scientist but I've see this story before.
In a world where the majority of talent, creativity and revenue lie outside of your company, successful business execs learn to create win-win relationships. Google is on a General Sherman scorched earth advance. They are lining up enemies in every facet of business including the customer ranks.
So, with many potential pitfalls, a less than proven management team and one significant source of revenue that they aren't all that good at-just better than anyone else-will they be successful?
Let's see what happens when the next Google comes along.
Posted by: B | January 24, 2006 at 05:39 PM
There is so much left to be done in search. Yahoo could probably have made some important technical improvements to our search experience, but instead they have decided to pay attention to only their market share. All of their products and services could be improved with better search.
So are they abandoning search altogether, or just the "search engine" market? That's the most important question I think.
Posted by: Mack D. Male | January 24, 2006 at 05:44 PM
I get my country information from http://www.cwik.com while at the library. Pretty cool stuff!
Posted by: Rick | January 24, 2006 at 07:04 PM
Search is responsible for something like 95%+ of Google's revenue, and probably not more than 75% of Yahoo's revenue. Why should Yahoo care so much about automated search as Google does? Besides, Yahoo quickly showed that it knows the value of features that bring into the search domain what the artificial intelligence of search algorithms cannot - human intelligence. We know who won between AI and humans. That may be the next frontier of search anyways.
Posted by: Mohit Mahendra | January 25, 2006 at 05:59 PM
PS...I meant features like content tagging on Flickr.
Posted by: Mohit Mahendra | January 25, 2006 at 06:00 PM
I think this is was a mis understood comment. Competition is important for yahoo and others, otherwise innovation will end. Your friends at Vertical Ads (http://www.verticalads.com) say it is best to be in it to win. Go Yahoo, work harder and see what new things are around the corner before tossin in the towel!
Posted by: Vertical is In | January 28, 2006 at 11:29 PM