The blogosphere is abuzz about the quote from Yahoo’s CFO Susan Decker to Bloomberg News (as run in The Seattle Post-Intelligencer) about Yahoo! search and Google. First, here’s her exact quote:
“We don’t think it’s reasonable to assume we’re going to gain a lot of share from Google,” Chief Financial Officer Susan Decker said in an interview. “It’s not our goal to be No. 1 in Internet search. We would be very happy to maintain our market share.”
It’s no surprise that not only are industry analysts misinterpreting this quote, but so are lots of bloggers too. Steve Rubel is probably getting the most visibility with his colorful comment that “Yahoo cedes search to Google and so do I”, but a quick glance at memeorandum shows that this is just the beginning of the misinterpretation and cloudy thinking…
Here are some headlines to consider: Yahoo quits?, Yahoo gives up?, Yahoo content to be Google’s footstool and Yahoo gives up race with Google.
As someone who has tracked the industry views on Apple Computer for years, I’m familiar with this particularly American thinking, of what I call “Win or Die.”
For well over a decade, analysts, pundits, critics and clueless twits alike have been writing about how if Apple can’t achieve the position of top selling personal computer vendor, it’s destined for a slow, lingering death and irrelevance. You’ve been reading these op-ed pieces for years too, in publications like The Financial Times, Wall Street Journal and Fortune. Lots of bloggers continue to beat that staccato drumbeat of “#1 or death” too, particularly with Apple and the Macintosh.
But those of us who actually can see beyond this myopic thinking have long since realized that being a specialty vendor, differentiating from the broad world of commodity, sell-more-or-concede, is actually the best and smartest strategy of all.
That’s the Ferrari Solution: don’t sell the most, sell the best. I mean, think about it, why on Earth would Ferrari want to sell more cars than Honda or Toyota? It’d just give them distribution headaches, maintenance problems, and, most of all, dilute the brand to where it wasn’t exclusive, wasn’t a sign of success, of being above the hoi polloi.
Apple’s in the same space and has done a brilliant job of, yes, being “the computer for the rest of us” who really don’t want to spend hours each week worrying about viruses, spyware, and shoddy software but instead want to focus on what we’re trying to accomplish, be it graphics, design, architecture, photography, or print layout.
When I read Yahoo CFO Susan Decker’s comment on Yahoo’s strategic direction for its search group, I do not see anything being conceded or Yahoo giving up or being “Google’s footstool” (for goodness sake!) but rather a company that is being smart and sharing that it has a very specific strategic direction and is traveling towards that, not blindly competing to be #1 in the search space by traffic.
After all, companies like Dunn & Bradstreet aren’t upset that they’re not the search company you think of when you want to find a local pizzeria, so why is everyone thinking that Yahoo’s going to crumble and be an also-ran because it doesn’t want to be all things to all customers?
Even the inimitable Robert Scoble’s missing this one, when he says: “I really don’t care about search market share. If I did I would have bet on Alta Vista. I didn’t. I went with Google because Google had better search. Tomorrow? I guess Yahoo isn’t confident.”
I don’t think it’s a confidence issue at all. I think it’s everyone succumbing to the win or die! perspective. Yahoo doesn’t have to be #1 to be a darn successful search system and extremely useful and valuable to the Internet at large.
It’s a bit too soon to write Yahoo off, that’s for sure. Let’s watch the Yahoo Search Blog to see how they respond, though, shall we?
I agree. Recent news accounts detailing Yahoo’s “social media” focus cause me to bank on Yahoo excelling in many more significant areas.
Three points —
1) If you assume the definition of “search” remains constant – sure, Google out-guns Yahoo and Yahoo would be doing well to maintain market share. Susan Decker’s comment [therefore] is spot on. But in the basement of this organization, Yahoo! architects are busy working to address the moving target of information discovery. You can see examples breaking the surface from time-to-time if you look closely – the future of search is *no* search at all.
2) In the lofts of Yahoo!, management understands the difference between a blue ocean and a red (or bloody) ocean. As you point out Dave – Yahoo! is very good at creating unique differentiators, but I think it’s more than that – they are sailing for a blue ocean (see ‘Blue Ocean Strategies’ by Kim & Mauborgne); the course was set long ago and if they’re right about the eventual replacement of ‘search’ as we know it, they will make their competition irrelevant.
3) Google is sailing on a slightly different course – perhaps tilting in ways that attempt to redefine the definition of the “desktop experience”. This is much bigger than focusing on information discovery problems. Indeed, the day will come when Yahoo and Google interoperate. 😉
I agree with your distinction between volume and value. But if Yahoo’s not out to be number 1 in Internet search, I think they need to make it more clear what they DO stand for. I found this in their “Company Info” links. (Visit: brand.yahoo.com) – Very “Blue Ocean”, but I’d never have guessed it from their T.V. spots and banner campaigns.
At the same time (and this may just be the clueless twit in me), I think Susan Decker’s statements do sound concessionary. You don’t hear Ferarri saying things like, “Well, we’re okay with Hyundai selling more cars than us.” They don’t need to.
From a brand perspective, Yahoo’s got a long road ahead before they can fulfill their mission of becoming “the most essential global Internet service for consumers and businesses.” Right now they sound a little like the guy who came in second at the Tour De France. What was his name? Hold on I’ll Google it…
Am i the only one who feels that this whole episode has been blown out of proportion. Geez… it’s probably a defensive move to put their competitors’ guards down and strike them hard once their social network has reached production level.
Here’s the response on Yahoo! Search blog:
I don’t think Yahoo’s out to a niche player like Ferrari. They are a giant. Search is vital to them. They’ve said this all along. My point is that simply to maintain marketshare will require continued innovation and excitement on that front. The quickest way to lose marketshare is to set out a strategy simply to remain #2.
The question is whether the rest of Yahoo’s strategy, much of it based on community connections, compensates for this setback in search.
To your list of things we Mac users are trying to accomplish, I would add “programming, system administration, content management, and business accounting.” Your list focused on what lots of people still mistakenly assume is all that Mac is good at – creative applications. Today’s Mac isn’t just a fast car for the creative class. It gets the job done quickly and elegantly for us business and techie types, too.
Yahoo!’s comments underline the difficulties any Internet company faces in trying to challenge Google’s dominance of the Web search industry. Google has at least double the market share of Yahoo! and Microsoft Corp. in Internet search, the largest and most profitable segment of online advertising.
I wrote a little bit more about how Apple and Ferrari are alike. They truly are my two favorite companies and both have really pushed their industries towards advancement.
check it out: http://www.rikinontheweb.com/apple-ferrari-finding-inspiration-everywhere
Thanks for such a great post!
It´s clear that if you sell the best products available you have a position of privilege in the market.
How things have changed for Apple since this blog post was written. With the iphone, ipod, and ipad their market share has grown enormously over the past few years.