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Jul 31, 2009

Yahoo Gives Up?

As a shareholder of Yahoo (granted a rather small shareholder), I am not sure what to think of the announcement this week. Basically, Yahoo is going to outsource the development and maintenance of their Search Engine to Microsoft. For the 10 years the deal runs, it looks like a good deal for Yahoo. But what happens after that? Essentially, you have killed all your search and advertising R & D. You have nothing to fall back on. No software, no expertise, all gone. With only two options to choose between, this puts you in a very weak position for negotiating your next deal. Plus, after 10 years could you even contemplate decoupling your infrastructure?

So, this begs the question. What is Yahoo trying to be? The biggest online newspaper? That seems more than a bit risky. Some sort of web app conglomerate? A little more potential there.

For me, Yahoo has always been great at creating or buying innovative web services and applications. But once they have a great app, they don't seem to know what to do with it. Take Flickr, a totally awesome service that they really haven't improved much since they bought it.

But there is hope. I like the improvements that have been made to Yahoo! News and My Yahoo!. They have a number of very cool apis and dev tools that have a lot of potentional. Maybe with a little more focus on the assets they have, they can find new ways to grow.

Bottom line. Once the deal goes through, the die has been cast. Their future no longer lies in search.

Below are a few more opinions on the deal.

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