Yahoo is in an enviable position: It's making tons of money and has plenty of top-notch products such as Yahoo Finance, Travel, or even Yahoo Search itself. New stuff is coming out every month, and some interesting companies have been acquired recently.
Still, the public perception is that they've fallen far behind Google. But the goal for Yahoo can't be to out-google Google by cloning all their products.
So where can Yahoo show some muscle and leverage its unique strengths? Here's my wishlist for what I'd like to see them do:
- Reach out to partners
- Customize pages to reduce UI complexity
- Stay humble
No. 1: Reach Out to Partners
When I was an intern at Yahoo! Germany in 2001, it seemed like every website in the country was desperate to partner up with Yahoo.
Yahoo's partners are probably their most valuable asset. These are often small- to medium-size companies that deliver content or products on Yahoo sites. Deals can range from providing articles for Yahoo Autos, hotel rates for Yahoo Farechase, co-branded DSL deals, or job search sites hosted by others under a Yahoo logo. For their help, partners get clicks, eyeballs, and sometimes even money.
Google doesn't have such partnerships. They have some financial ties through AdSense and AdWords, but for content, Google is happy to be on a meta level. A good example is Google News, where they search and organize the information but don't actually deliver it through their own site. With Google Base, they provide a platform for serving content but don't integrate it further than serving and searching it.
So where can Yahoo help partners?
Many of them are small websites which are just barely self-sustaining in terms of income. They can't afford a large staff of developers to create fancy features for them. This is where Yahoo could come in. Here are two ideas:
- Single Sign-On: It's very hard for small services to get users to sign up for anything. Users are lazy and wary about giving out information. For example, with YourGMap, only 10-20% of visitors eventually sign up. Also, remembering usernames and passwords for all these sites is hard.
Yahoo could come in and offer a nice and simple solution to keep track of users. "But," you say, "Microsoft Passport failed miserably!" True, but it also wasn't done very well. Someone could try again.
- Micropayments: Let's not kid ourselves – while people do click on those omnipresent AdSense ads, the click-through rates are small. Yahoo could step in and build a product that lets partners charge $0.05 for viewing an article on their sites. At the end of each month, Yahoo could sum up what each user spent across all their partners and send out a bill to the user.
According to Paul Graham, "newspapers and magazines are (literally) dying for a solution." Yahoo could provide it.
The folks from Sunnyvale already have their foot in the door at many sites:
CNN and
Spiegel.de both have Yahoo as their search provider. It's time to venture a bit further.
No. 2: Customize Pages to Reduce UI Complexity
I went through a recent version of the www.yahoo.com page and counted
162 clickable elements. That's a lot of choice! www.google.com has less than a tenth of that.
My initial reflex was to write "make it look like Google". And, in fact, they've
tried.
Millions of people go to the Yahoo homepage every day. If you introduced radical changes, there would be an outcry from users. Some would go on a hunger strike.
So I asked myself: "Why do
I visit the Yahoo homepage every day?" The reason is that I want to be entertained. I want to see today's ad campaign monstrosity (dragons flying across the homepage, anyone?); sometimes, I'll even click on banners touting Shakira's latest music video. Most of the time, I click on one of the news items to the left.
Still, I have a craving for simplicity. When presented with a simple, clear interface with sensible options and presets, I'd prefer that over a bloated buttonfest.
So here's my idea: When a user is already signed in, make My Yahoo the default homepage – with one minor change: Make My Yahoo completely autoconfigured: Few people will take the time and effort to select their own 'content modules'. Instead, if Yahoo finds out that Aunt Margaret loves horoscopes, they should add it to her frontpage. Else, they should leave it off.
Some ads on the homepage can stay: I find a few of them quite entertaining and Yahoo seems to be
earning loads of money with that. Simpler pages will make ads on them even more precious.
No. 3: Stay Humble
Google, unfortunately, is widely regarded as arrogant, even if they're not trying to be.
I've always had the feeling that L & S have a strong sense about what's right and wrong. For example, since they thought that investment banks giving IPO stock to their cronies was evil, they bypassed the whole allocation system and opted for the auction-based IPO. Not good if you want to win friends among bankers.
But even those they should be nice to are complaining: A friend of mine spends about $5000 on Google each month, yet when he sends them e-mail, no one answers. All this has helped cultivate the Google's reputation of arrogance.
Yahoo has a different image. They are friendly to their users, but have a high tolerance for bombarding them with ads. Ergo, they are probably also friendly to their clients who supply these ads. In addition, they seem very open to outside developers, to the point of
spelling out the building blocks of their internal systems. This is a good foundation to build on.
Trying Many New Things
With a new product coming out every few weeks over at Google HQ, I often feel like their strategy is just to come up with many ideas, big or small, and checking which ones stick as well as, say, Google Search did. This is much better than leaking out memos of great visions, or promising vaporware years in advance.
Last year, Jerry Yang
said: "During the 2000-2003 downturn, we were focussed on survival rather than the more fundamental 'how do we stay relevant?'. We took our eyes off of what emerging trends were starting to take off."
Now, Yahoo seems to be on the same track as Google. Not only are they
cranking out new features at a fast pace, they're also acquiring a lot of companies.
Flickr,
Outpost,
Konfabulator and
del.icio.us come to mind. And they're
not greedy, either. There's nothing wrong with bringing in talented people with fresh ideas.
When I wrote this entry, I had the feeling that I'm missing that one capital-B Big Idea that will catapult Yahoo into the stratosphere. Such things are hard to come up with, because big ideas often seem inconsequential in the beginning. Even AdWords once earned its first dollar. If you keep trying new things, you'll end up fine.
Rich web applications like 
A large portion of my computer time is spent with Eclipse, the Open-Source IDE.
