I am pretty sure like everyone else you have been following the Yahoo saga, starting with the shock of the bid with Microsoft, through all the twists and turns. I am not going to comment on the commercials of this; not sure anyone needs more on this given all the coverage I have seen to date in the Press and online! What interests me is the early stage potential consolidation of what I would describe as a technology market that has yet to become mature and the impact that has on the technology.
By the way for those not keeping up with the news so called ‘white knight’ AOL has now gone off and bought a search company, albeit perhaps not a general search engine, but a more focussed one. Meantime other names are being quoted, or speculated, as being interested, and the list now includes Google, (of course), and News Corp. At some stage all markets become mature and consolidation occurs, witness the recent main software vendor’s activities in buying up smaller companies, but this is usually a sign that innovation in the market, or the products, is now slow and revenue growth needs to come from this route.
Have we really reached this stage with the technology of the Web? I don’t think so, I think the challenge is the maturity of the business model based on advertising, and the race to find ways of increasing this market, that must be finite, is leading to these moves. Actually what concerns me is that the result will be a premature slow down in technology development. If I review what each of the potential players focuses around it highlights the current differences that might be lost.
Yahoo is still a hugely popular portal with, in Feb 2008, 137 million American visitors, amazingly just ahead of Google, as well as other players. Its challenge is that its portal approach is at risk from Social Networking sites, so it has been much more focussed recently on the Mobile market where its Portal is very much number one. Microsoft might like this to develop its Windows Mobile franchise, but I guess the other players might see this activity as a distraction from their main activities so it could be at risk.
By contrast the News Corp challenge is led by ownership of MySpace and the desire to create a new market around Social Networking to which the sheer volume of Yahoo users represents an attractive addition, but would they really want to carry on with the Yahoo Portal or merge it into a Facebook presentation layer? I guess the entry into the Mobile business would be attractive so the core Yahoo technology might well still be of interest. If you assume AOL is still interested then they own Bebo.com, though apparently are not pleased with progress there, and their strength is the e-mail and Instant Messaging market, to which Yahoo I guess is an amalgamation play with the other aspects somehow parcelled out to Bebo?
Interesting the thought of a Yahoo/AOL combination with the resulting dominance in e-mail and Instant Messaging has already resulted in the EU expressing concerns on the dominance, may be that’s why they now seem less keen. Maybe Yahoo will stay independent, but there seem to be a whole variety of commercial maturity reasons in the advertising revenue market why there will be consolidation and that does suggest some early ending of technology variety and progress.
Or maybe it will have the opposite effect and create more focus on other business models that don’t rely on advertising funding and create a fresh wave of activity around a wider range of technologies? There is certainly no shortage of new start-ups with new ideas at the moment so I have high hopes that this will be the case.