Wednesday, October 11, 2006

Yahoo! pressure

Google is piling the pressure on Yahoo! after its YouTube acquisition.

Despite being told by some that it is just about to enter a world of legal trouble with its huge $1.65bn acquisition of YouTube, Google is seen as leading the way in terms of dotcom innovation.

It has added YouTube to Blogger, dMarc and Picasa, as well as others it has bought, but YouTube, despite its potential problems, is by far the biggest and most interesting deal it has struck. YouTube has blown away everything else in video that others are trying, including Google's own video service.

Now people are looking to see what Yahoo! will do, and whether it will be able to clinch a deal to buy the number two social networking site to recapture momentum from Google.

Google has raised the bar to a new level with YouTube, echoing back to the 2000 dotcom boom years. Echoing, but not revisiting.

This time around there are just a few big players who are snapping up every new juicy minnow that comes along.

If Yahoo! waits around too long it will be beaten to the punch as the sector gains in confidence and, more importantly, the valuations continue to rise. Second-tier players are seeing their valuations rise in turn.

Who would have guessed a year ago that Google would be paying $1.6bn for a company that makes no money and has less than 70 staff.

Facebook looks like it will cost $1bn. This is a price that Viacom has already blinked at before slinking away.

It's almost double the price paid for Myspace, and Facebook has nowhere near the cachet nor international recognition. Of course, if you tried to buy Myspace this week (if you could) it would cost a billion plus dollars.

Analysts are looking at Yahoo! with disappointment as it gets outmanoeuvred by Google, and are looking for it to do something meaningful to gain positive interest and restore investor confidence.

I've never been a huge Yahoo! fan. From its early days it never looked like a internet firm that had that much vision. It was big and survived, but really it missed a massive trick with its Yahoo! Groups -- the early forerunner of social networking that was born out of its 1999 acquisition of eGroups. Not to mention Geocities, which Yahoo! also bought in 1999.

It evolved from being a search engine into a bit of a hard to define sprawl, no longer a portal, but a generic digital media company with search and content at its heart.

It is now paying attention to its Yahoo! Groups, but too little too late, which is why it is having to consider buying Facebook for $1bn, which is a huge price tag driven up by just months of talk on the future of the web.

Now as for Google, it needs a social network service of its own to rival that of Myspace and Facebook (if it doesn't mount a surprise bid), so I guess there is always Bebo, the UK player, which is still unclaimed.

Viacom has looked at it (as have others), but so far no bid. It won't be too long though.


At 3:53 PM, Blogger kenobi said...

Yahoo's in a better position than most sites. It makes money.

Yahoo Answers is going great guns, it's games portal is the most popular on the web and its Finance page is still number one in the market (hence why Google tried - and failed - to launch its own version). Yahoo's video service, which it launched a while back, is a powerful aggregator. Yahoo mail is also one of the biggest mail services in the world.

Admittedly, Yahoo appears to be made up of silos, some good, some not so good, but it's in a strong position - ie the ability to make money while it experiments.

Don't kill it off just yet.

At 5:03 PM, Blogger Stephen Newton said...

ditto Kenobi
And isn't it the case that people are often surprised by the number of products Google offers because so many have failed to take off?


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