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Payday Loan Blog - Yahoo's Acquisition Report Card

 
 Monday, 11 June 2007

The Yahoo Report Card

Based on the feedback received from a few social media sites, Digg especially, there was certainly interest in seeing how other major search companies fare in comparison to Google, on an acquisition basis. Well before Google started buying everything in site, Yahoo was the major acquirer of everything digital. How do these acquisitions measure up, in terms of helping to create an economic moat?

To understand the future, we once again need to peer into the past. With the help of the wiki article on Yahoo’s past acquisitions, the following is an attempt to score each acquisition. A “good” or “bad” acquisition is based solely on whether Yahoo has done anything useful, to date, with that acquisition. Since we have no real insight into the depths of Yahoo, in terms of key engineers that might have floated from one project to another, it is conjecture at best. But hey, we hope you enjoy the analysis anyhow.

COMPANY

DATE

BUSINESS AREA

GOOD/BAD

Net Controls

September 1997

Software development

Mixed (A news ticker developer was their first acquisition. It is good in that it was originally considered a ‘killer app’, but bad in the sense didn’t really offer anything to Yahoo in business terms that couldn’t be easily developed)

Four11

October 1997

Rocketmail

Good (Rocketmail became Yahoo Mail and is widely used today to keep people on Yahoo branded properties)

Classic Games

March 1998

Video Games

Good (freebie video games went hand-in-hand with the Yahoo Mail…this definitely shows their focus on capturing eyeballs)

ViaWeb

June 1998

Online storefront

Mixed (it was good at the time for Yahoo to provide a solution, but lack of innovation on this product gives it a bad score…much more could have been done with the Yahoo stores to turn it into a de facto standard)

WebCal

July 1998

Software development

Mixed (a calendar solution is good to have, but purchase of one that could be easily developed makes it a bad purchase, given that it didn’t help to capture and retain eyeballs)

Yoyodyne

December 1998

Direct Marketing

Mixed (Good talent purchased with the promise of prominent entertainment sites for their media empire, but what happened with it? Bad)

Sportasy

December 1998

Fantasy Sports

Bad (They basically just bought out a partner with a website as a way to remove competition, when that competitor wasn’t established. Yahoo fantasy sports has room for increasing eyeballs, but they didn’t need to buy anyone to do this)

Hyperparellel

January 1999

Data mining

Good (A CRM system to help understand the consumer only adds to core knowledge base)

Log-Me-On

February 1999

Bookmark manager

Bad (Bookmarks at the time were managed more at the browser level than an external software solution; little has changed)

GeoCities

May 1999

Personal websites

Mixed (Good in that this property held more promise than Google’s Blogger purchase. Bad in that it was never made a priority and exists side by side yahoo 360)

Encompass

May 1999

Registration automation

Bad (there was no reason to spend $130M to help people register their hardware, then or now – it was supposed to help people get online, but that was never a focus for Yahoo)

Online Anywhere

June 1999

Content reformatting

Bad (Yahoo was never in the browser business and this was a browser solution)

Broadcast.com

July 1999

Streaming audio/video

Good (The cost was high, but for a “media” company, this represents an important purchase in terms of playing in a future channel)

MyQuest

November 1999

Telecommunications

Mixed (bad in terms of unknown value due to lack of info; good in that it appears to be for audio/video data store that would tie into the broadcast purchase)

Arthas.com

March 2000

Payment solutions

Mixed (Payment solutions would have been interesting to offer on the Yahoo stores; bad since it clearly failed and is now regulated to a parking page)

eGroups

August 2000

Groups

Good (It is now a part of Yahoo Groups, but this is almost a “mixed” purchase since the Groups project has been largely neglected)

Kimo

November 2000

Asia

Good (Yahoo intelligently made a foray into the Chinese and Japanese markets before many other online firms; their share is still strong in Japan)

Sold.com

April 2001

Auctions

Mixed (Good in the sense of offering auctions, but the idea failed, and now it redirects to a real estate site)

Launch Media

June 2001

Music

Good (Yahoo Music has been a useful product for the media company, in retaining eyeballs and eardrums)

Hotjobs

January 2002

Jobs

Mixed (At the time, Hotjobs as a strong competitor to Monster; since then hotjobs and Yahoo Jobs have taken a back seat innovation-wise)

Inktomi

December 2002

Search

Good (Yahoo needed its own search technology in order to compete against Google)

Overture

October 2003

PPC

Good (Yahoo’s best purchase, profit wise, but still wasn’t given the attention it needed…and now is second fiddle to Adwords)

3721 Internet Assistant

January 2004

Spyware

Bad (It should be obvious that this just isn’t a good thing for Yahoo to be doing, but still…it likely made them money)

Kelkoo

April 2004

Price comparisons

Mixed (Good in that it has been profitable since 2002, but bad in the since it never really made sense for Yahoo to own and hasn’t been integrated)

Oddpost

July 2004

E-mail

Good (Paid e-mail was good at the time for premium services, but now all those features are largely free)

The All-Seeing Eye

September 2004

videogame server browsing application & service

Good (this was helpful in integrating with the Yahoo Games)

MusicMatch

October 2004

Music

Good (complimentary purchase to expand the Yahoo Music brand)

Stata Labs

October 2004

E-mail

Good (This would have mixed about a year ago, but the features from the “outlook killer” were finally integrated into Yahoo Mail)

WUF Networks

November 2004

Content control

Good (this allows for controls and access to a variety of multimedia, which a media firm should be good at handling)

Verdisoft

February 2005

software development

Bad (it was intended to help mobile customers keep in synch with data, specifically Yahoo data. Again, this was not a ‘Yahoo’ issue though, but a device issue)

Ludicorp Research

March 2005

Flickr

Mixed (Good in that it is a very strong social image brand, bad in that they haven’t integrated it yet into Yahoo. They really need to get better at the integration piece)

Stadeon

March 2005

cross-platform gaming technology

Mixed (multi-platform gaming could have been an intriguing fit for Yahoo Games, should that have been their primary focus. With Yahoo though, focus is an after thought, so as far as we know, it died)

TeRespondo

April 2005

Brazilian performance-based advertising network

Good (Any performance-based advertising is key to Yahoo’s success)

Dialpad

June 2005

Voice

Good (Yahoo Voice could become the next Vonage, provided they support and nourish its growth)

Blo.gs

June 2005

Blogroll

Mixed (This was a great idea for a purchase, in terms of aggregating content from a media control perspective, but again they didn’t do much other than throw a feature on My Yahoo)

Konfabulator

July 2005

Widgets

Good (This is still listed as good since it could be useful for Yahoo’s insanely large and diverse web empire, but given they went and purchased mybloglog that shows the tech was never really used much)

Alibaba

October 2005

Search

Good (Yahoo needs all the help they can get promoting search as a brand, and Alibaba may eventually have intellectual capital in the area that exceeds Yahoo’s)

Upcoming.org

October 2005

Social Calendars

Mixed (Another social media site is great if truly integrated, but it isn’t…again)

Whereonearth

October 2005

Search

Good (Geolocational search will be very valuable as consumers demand localized results)

del.icio.us

December 2005

Social bookmarking

Mixed (This is a very promising social bookmarking site that is heavily used, but if Yahoo doesn’t allow it to keep innovating and doesn’t share data with it from other social media sources, what will happen?)

SearchFox, WebJay

January 2006

RSS

Bad (A RSS reader was already purchased by Yahoo; this one also fell apart)

Meedio

April 2006

Digital Media Management

Good (Yahoo’s core is media, so managing media is a helpful compliment)

Jumpcut.com

September 2006

Video

Good (Video editing and hosting could be a good rival to Youtube, if it ever is given internal capital from Yahoo)

AdInterax

October 2006

Rich Media creation

Good (An apparently compliment to Jumpcut, and possibly a future compliment to Overture and Right Media)

Kenet Works

November 2006

Social mobile

Good (Another social concept, with a mobile focus; the same questions remain given Yahoo’s non-integration)

Bix.com

November 2006

Video

Good (Yahoo’s answer to Youtube? Still too early, and practically no buzz)

Wretch

December 2006

Social Taiwan

Good (Another community, another question of integration)

MyBlogLog

January 2007

Blog widget

Bad ($10M for a widget that is slowly made into a heavily spammed social networking tool?)

Right Media

April 2007

Advertising platform

Mixed (Good that Yahoo decided to expand their performance-based advertising presence…bad that it only happened after Google bought Doubleclick and was followed by Microsoft’s monster purchase of Adquantive)

 

Remember that Google was rated at roughly a 3.5 GPA based on its “good”, “bad”, and “mixed” scores, so it was a tough task to measure up to. How did Yahoo do? To say that they’ve had a peanut butter strategy is an understatement – an outsider with no understanding would have a tough time figuring out core competence other than to say “they do something online;” however, the possibility does remain that especially with the sheer number of communities purchased, a simple and effective solution to tie the Yahoo brand and networkability back and forth could create a very powerful company…search at that point almost becomes an afterthought since a consumer of information can become a consumer of goods simply by virtue of connections.

So far, most of the purchases, from the outsider’s point of view, were made…well, simply because they were available. One would hope that an acquisition is made to bolster core search technologies, or expand advertising reach (given that Yahoo is more of a media company than a search company), or perhaps to extend web accessibility value chains and make sense of all the data. Unfortunately, this just didn’t happen, since Yahoo’s strategy, just looking above, has been to buy first and ask questions later. At the time of some purchases the ideas seem fantastic, but the execution has been horrendous… purchasing a key widget maker in 2005 but then not doing anything with it and thus having to purchase another widget in 2007 is unacceptable; given Yahoo’s strategy, I would not be surprised to see them acquire more search technology that never gets integrated, more social networking sites that don’t share information among a standards-based architecture, and the occasional completely unrelated purchase for the sake of spending money that could be spent overpaying a CEO 900+% against peer average (I kid… sort of.)

Does this mean that Yahoo isn’t likely to ever rival Google for online dominance? Most likely. While Yahoo gets more eyeballs to the entirety of its network, the network is so fragmented that its power doesn’t conform to Metcalfe’s law, and thus is underutilized.

It is only a matter of time before the Yahoo brand is purchased by a very smart media/tech company, with pieces spun off at top dollar, and the rest properly integrated to extract true value… IAC or Microsoft? eBay or Amazon? We’ll be watching.

JoeSinkwitz



Monday, 11 June 2007 10:01:15 (US Mountain Standard Time, UTC-07:00)  #     
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