Why I am sunsetting Yahoo!

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Aside from the personal inconvenience that Yahoo!’s sunsetting delicious is likely to bring, the process told me a lot about the way Yahoo!’s management team was thinking about the business.
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Lets start by having a look  at a copy of the slideware that is doing the rounds regarding Yahoo!’s consolidation of services.

If you look carefully you can see that Yahoo! is ‘sunsetting’ all its bookmarking offerings: delicious and Yahoo! Bookmarks. If you are a bookmarking Yahoo! user the company is not giving you any plan B like you had when they got rid of the MyWeb service.

This consolidation also features obliquely in an internal memo sent to all Yahoos yesterday where Carol Bartz writes that:

… it’s no secret that we’re cutting investment in underperforming and non-core products so we can focus on our strengths (like email, the homepage, search, mobile, advertising, content and more).

… I didn’t come to cut Yahoo! to greatness. That’s still true. This decision is about more than cost savings. The changes are meant to get us into a position so we can invest more in the kind of products and technology we know we need to be successful.

A couple of things here:

  • Search is a strength that is to be focused on (by outsourcing it to Microsoft)? Ok, I am not sure how that makes sense which means that the rest of reasoning has to be open to scrutiny
  • Email is only a strength if consumers trust you with their accounts. Bookmarks are almost as personal a set of data as your email. For those of us that use them it is our online memory bank. If someone was getting rid of your bookmarks on say Delicious or Yahoo! Bookmarks, why would you continue to trust them with you email account? Or your flickr account for that matter?

So you build up a bank of distrust regarding personal information, pretty soon after a competitor launches a new mail service? Facebook offers email as part of its new Messaging offering. This is the  same Facebook that is now responsible for 25 per cent of display advertising, so I guess that would make them a serious competitor for Yahoo!?

Just how hard could it be for Facebook to strip-mine Yahoo!’s Mail product client base?

Ok, let’s give Yahoo! the benefit of the doubt and assume that it has a low-income 50+ year old audience base in the Mid-West who think that Facebook is something that the police get victims look at, to try and identify perpetrators.

What about the people who currently buy advertising inventory on Yahoo!? If you look at Delicious’ user base it comes from the creative classes. These are the people who act at tech gurus to the less tech-savvy people amongst their family and friends.

They are some of the most visible and vocal people online, a number of them will be members of the media who are likely to adversely affect the press sentiment towards Yahoo!. Given the current state of the company’s and leader Carol Bartz reputation, you would think that they need all the friends that they could get?

Lastly, at least some of which (like me) influence search and display advertising purchase decisions? Like the memo said you can’t cut Yahoo! to greatness and I have to ask why on earth would it be prudent to buy advertising inventory in a media company that is that disfunctional? And if the likes of me won’t fund it, who else is going to pay for the boomer-orientated media business?

Yahoo! could try charging for its services, but as many media companies will point out, its hard to charge for a service that was once free.

How long is it before equity analysts start asking the hard questions?

From examining the process, it is likely that the decision was purely based on a spreadsheet of traffic numbers without thinking about the follow-on implications, or because the situation is too grave to consider the longer term follow-on implications.

If it’s the former, it is a sign of poor management that hasn’t thought through the implications of its decision. It has bigger ramifications than annoying some pensioners in Idaho. However if its the latter then one has to worry for the financial future of the business?