Yahoo Not a Market Leader

Yahoo offers a nightmare for investors believing the company is capable of being a leader. What it knows how to do, the only the thing it does well, is figure out ways of getting people’s attention. Remember the cowboy rodeo yelping, “YAHOO!” of the 1990’s? Now Yahoo has struck a deal with Starbucks hoping it will help bring people back to the Internet portals homepage.

It is a pipe dream. While the deal itself is bound to create some movement for Yahoo in the short term, the move is a parlor trick. Yahoo continues to do little to solidify its core, falling behind both Google and MSN in what users can expect to be offered with email. Google Docs and Microsoft Web Apps both offer compelling services Yahoo lacks, giving potential users little reason to stick around.

A far bigger problem is Yahoo’s inability to deal with spam. Ten years ago, before “Social Media” was a catch phrase, Yahoo chat was a huge destination for the social hungry web. Today, Yahoo chat rooms still exist, but the rooms are crowded with bots. The user base has shrunk to almost nothing. Just signing up for a new Yahoo email account is an invitation for spam to hit an in box. Who wants to deal with this?

Underneath it all, Yahoo pays little attention to the technology it does produce. Yahoo Messenger might have been a cutting edge idea at its release, but it lacks the quality of service found in competing products like Skype or Google Talk, two services which not only provide messaging but have headed towards WiFi communications with real phone numbers.

This isn’t to say Yahoo lacks the capability to make money. On the web content is king and Yahoo provides a lot of content. Yahoo also provides services independent of a fanatical users base, like ads. However, Yahoo is losing the ability to be thought of as part of the tech elite. Apple, Microsoft, and Google have all found ways to leverage different facets of their core business despite competition among themselves and upstarts like Facebook. Sure, the big companies are mimicking each other too, but they each have unique positions in the market they all secretly envy as well. Microsoft practically own the desktop, Facebook has become the standard for social media, Apple knows how to break in new markets with a brand shouting high standards, and Google is search.

At the end of the day, Yahoo has built the K mart of online networking. The real deal is the company has not taken an honest assessment of itself to provide a vision for the future. While the brand will continue to exist, even make money, it is only a ghetto superstar watching its potential slip through its fingers.