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).



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