Back to 2003 - The End of Yahoo!'s Experiment in Search

Today's announcement of the 10 year partnership between Yahoo! and Microsoft has effectively ended Yahoo! grand experiment in search.  Remember early 2003 (see picture below) - back then Yahoo! had still not rolled out it's own algorithmic search and was outsourcing it's paid search to Overture.  The company then made moves to invest in the core search technology, acquire Overture (for its search monetization solution) and immediately drive shareholder value (as the stock price went from ~$15 to ~$39 over the course of 2 years). 

Today's deal may very well be the right economic decision for Yahoo! as it is hard to argue with lowering costs, increasing revenue, and driving profitability.  Yet, there is no doubt that Yahoo! will not be the same.  Wait, maybe it is . As Carol Bartz said in her company email: "we’ll be able to focus on the things we do best–being the center of people’s lives online with properties like our homepage, mail, finance, news, sports, entertainment, mobile, etc".  Sounds a lot like 2003.

I am most interested in where Yahoo!, and its employees go from here.  On one hand, the inability to make search work may impact employee morale and confidence in new product innovations.  On the other hand, maybe this new focus will spark Y! to truly excel and execute with its limited vision (and just hope it is big enough).

Comments

[Ariel]

To me it all goes back to the content versus software debate. Yahoo started out as a directory of internet resources. It was high value, human curated (at the time) content.

Then Google came along with a better mousetrap for search. Google has and always will be a software company. They are tool makers. Any content they pick up is a byproduct of giving users the best tools.

I think the content market is wide open and that Yahoo can get back to its roots and focus on content publishing. It should be the TV Guide of the internet, for starters. Not all use cases begin and end at a search box. Just look at how popular their Answers property has become.

[willanj]

Ariel - you may be right. I agree the content play is core to what Y! was and is. Similarly Microsoft has clearly been challenged with its content properties (as its core is software). Thanks for the thoughts - it provides a nice framework from which to evaluate this deal.