Why the Microsoft-Yahoo Search Deal Should be Good for Yahoo and Good for Consumers

image Lots of stuff on the web today heralding the death of Yahoo.  Not least this one from Jason Calacanis, that sits atop Techmeme as I write.  Nothing could be further from the truth though…provided Yahoo play it right.

Jason argues that Yahoo is dead because they lost the battle for Search eyeballs…a category they helped define.  He argues that Apple and Nintendo beat Microsoft through “aggression and innovation”.

Maybe. But you need to decide which battles to fight.

Before Apple won big with the iPod, they lost against the PC, lost against Windows and lost against Office.  They lost to the extent that they even needed to be bailed out by Microsoft.

Before Nintendo won big with Wii, they lost out massively to PlayStation with the GameCube, and many commentators were predicting a slow, drawn-out death for them.

What happened? Apple and Nintendo both found new niches that played to their strengths, where they could dominate; Apple with the portable music player, and Nintendo with casual video games.

So, what next for Yahoo? Time for them to double-down, look at their strengths and portfolio, innovate and then go out and define their market. There is absolutely no reason they cannot  do what Apple and Nintendo have done so successfully.

Yahoo have an awesome array of consumer applications, from Yahoo Mail and Groups, through News, Flickr and Messenger.  And then their is delicious.com. What the heck happened to that? In fact when you look at Yahoo’s array of consumer-focussed social software, it easily trumps Microsoft, it’s better than Google and faces biggest competition from Facebook.

Yahoo now have a guaranteed revenue source from Microsoft, are freed from the need to chase Google in Search, and can now focus all their energies in excelling in their category of choice.

Time for the new Yahoo to step forward…


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