Thursday, March 8, 2007

Too early for an eulogy

Piper Jaffray's lead Internet analyst Safa Rashtchy discusses in an Adweek interview his outlook on Yahoo! and other portals:
"In an earlier report you said Yahoo risks an "AOL-like decline." Why do you think Web portals are yesterday's news?
Early on people didn't know what this medium was, and they had to rely on portals to guide them through. They didn't know how to navigate easily, they wanted the convenience of having everything in one place, and they didn't really trust any other brands. All those things gave portals a tremendous advantage but now, as I mentioned, people are fairly savvy, sophisticated and confident. Online has proven to be a relatively safe and very efficient medium. People basically are saying, "I can find my way around here and I'll make my own choices on my interests very easily—if I don't I go to Google and find it." I think in some ways people don't realize this but search has helped diminish the role of portals.

How would you transform Yahoo?
Yahoo still has a good franchise in its brand name and the reach of its properties. I think it has to forgo the strategy of putting everything under the Yahoo brand. They have to own properties and services that users want. Yahoo has to think of five, 10 years from now, when there won't be much of a position for a pure online company. If you're going to be a media company then be a global media company, and think of ways to help people get things done and help advertisers get in touch with the community. It's kind of a long way to describe it, but I think Yahoo has to rethink its strategy of just relying on the Yahoo brand and instead look at smaller but deeper relationships with groups of people."

I agree wholeheartedly with Rashtchy. Yahoo! should leverage its acquisitions to make itself the king of social networks. Yes, YouTube and MySpace were picked up by competitors but that doesn't mean it's too late. Yahoo should either develop their own social network solutions (Yahoo! Answers was a good start) but, in addition, they need to snatch up smaller social properties. We're heading towards a major fragmentation of social networks and Yahoo could play the role of an aggregator. Let's face it: Panama was a great step but it came years too late. Google has won that fight and Yahoo has to develop a new niche. They have the cash and people to do it.

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