Many tech writers have a soft spot for Yahoo!. It was one of the first big dotcom companies and it didn’t succeed enough to be seen as a real threat to much. What is more, beyond its first few years as The Player in the portal market, it has been hard to parse precisely what market it is in. The closest perhaps is ‘media’ but somehow that never felt right. Nonetheless, despite the lack of what anyone might call a coherent strategy, Yahoo! has been a performance rock. For any other tech company that fell from potential leadership, the path has been to oblivion. But for Yahoo! they have retained and grown their user base. For instance, with respect to WebMail — which they largely pioneered — their world wide market share continues to rival Google and Microsoft. It is just that it, with some small exceptions, Yahoo! services are not the ones tech commentators use.
But there is some clarity emerging with regard to Yahoo’s strategy. When Yahoo CEO, Marissa Mayer talked with Steven Levy the other week, it was revealing. Mayer never used the word portal but she seemed to articulate a strategy that respected the elements of that. Mayer wanted Yahoo on every device and its 700 million customers, using Yahoo for their daily internet activities. It is this that suggested to me that the notion of portal might be back.
To see this, recall what a portal was supposed to be: a gateway to the Internet. If a company secured the portal for a consumer, that consumer would to the portal and be guided by it as to where to go next. Ideally, they might never leave the portal with the portal bringing what they need or want to them. The business model that sat side-by-side with this was a traditional one: grab the consumer, monopolize the advertising access. Just like the daily newspapers of old, portals were something business people could understand. You compete hard for consumer attention and then sell access to that attention to advertisers. Advertisers know what they are paying for and so pay up big.
Portals died quickly despite massive investment. In 2000, no one had enough muscle to work out what consumers wanted in a portal and so consumers went out on their own. Google certainly helped that and in the process took an advertising model to a non-curated content model. The end result is that consumers were everywhere, advertisers didn’t know where to find them and so they weren’t willing to pay up for the priviledge. It is no wonder that businesses — particularly, media —that were reliant on that advertising model struggled.
But the Internet and consumers have matured. They developed strategies to deal with information overload. Think what you do when you first get onto the net of a morning. For me, there is a set of five news tabs that open, along with my email, Facebook, Twitter and Google Reader. I am there every morning just as I used to be with a newspaper. For others, the strategy is different. However, I am willing to bet it is pretty stable.
Herein lies the opportunity. Being savvier than most, I could combine multiple services myself. For others, that is challenging and there is some demand for curation. Facebook has taken that role seriously and for many, that is where they need to travel. If I had to guess where the morning newspaper market went, it was to Facebook and the advertisers will eventually realise that. But news outlets like the New York Times probably still gets a good share of that.
Yahoo versus the rest
Here is where Yahoo comes in. If you look at its webpage redesign, it is very portal like. They want to be where people are going on a regular basis. The page is easy to lay out and with acquisitions like Summly, the content will be curated but at the same time help solve its user’s information overload problems. No other company appears quite so focussed on that role — media or otherwise. And if it pays off, Yahoo will be able to claim a large number of regular, predictable, daily visitors and make a pitch for advertising dollars to go with it.
In effect, Yahoo are potentially back to what is a focussed portal strategy and this hasn’t been lost on others. Facebook are doing the same thing but their strategy is focussed on the activity or news feed rather than information aggregation. Twitter is in a similar category but with a different claim on attention. Microsoft’s redesign of its services for browser access also appears to be looking toward customer acquisition but their goal is not advertising dollars but to siphon users onto paid premium services (i.e., what we used to call software programs but are now services). Apple is not in this game at all and are providing devices to enable any and all of these.
That leaves Google. Google are not in the portal business but are in the information overload business. For them, however, to provide better services to consumers, they need a window into each consumer’s activity. That is why Gmail is important to it; they can read consumer emails to tailor information and ads more effectively. Similarly, that is why Chrome, Android and Google+ are important to it. Google want people to use their services but are not aiming for the 30 minutes a day attention that Yahoo appears to be after. Nonetheless, despite very different business models and directions, the locus on competition remains the same: consumer activity.
One can imagine a world in which this current competitive pressure might turn around into mutual accommodation or even symbiosis. But for now, Yahoo appears to be back in something that looks alot like the portal market. That may not appeal to tech types but it will appeal to their parents. And there is gold there.