Yahoo and Reality
August 8, 2009
I scanned the SEO crowds’ view on the top Yahooliganette’s view that Yahoo is not a search engine company. You can read Search Engine Land’s view with a video link in its story “Revisionist History: Bartz Claims Yahoo Was Never A Search Engine.” The journalist who gave the story prominence was Ashlee Vance, writing for the venerable but struggling New York Times. That article “Yahoo Chief: We Have Never Been a Search Company” reported:
The company’s strength has been in collecting information, not producing it.
The write up contains some memorable quotations, and I urge you to read these first hand, not from the webbed feet of the addled goose.
Now the view from Harrod’s Creek:
Yahoo Chose a Path of Knee Jerk Adaptation
Yahoo lacked a vision. The company had money and it had quite a few individuals who operated as each was running a separate company. The result was that by 2004, Yahoo was a crazy quite patchwork of unrelated businesses. Often each had a separate technical infrastructure and not much enthusiasm for playing well with other units of the Yahoo empire. This became and remains a huge drag on Yahoo’s businesses. Reaction time is slow and costs are high and tough to control. In these knee jerks, Yahoo created great public relations but lacked a strategy. By 2005, advertisers could not buy ads that would be in front of a demographic across the range of Yahoo properties; for example, 18 to 24 year old males across Flicker, Sports, Groups, and other Yahoo properties. Knee jerk reactions are land mines for online information companies.
Yahoo’s View of Search Was Different from Google’s View of Search
I have had run ins with the wizards from Google and Yahoo. Believe me, the squabbles I have had with Google have been about search. Larry Page snapped at me when I chided him about his refusal in Year 2000 to support truncation. But that disagreement was 100 percent about search. I did not agree with Mr. Page, but we both knew we were talking about what was the defining application for the Internet in the post Year 2000 period. My squabbles with Yahoo were never about search. I would point out a search issue, and I would be met with a haughty, uninformed response in most cases. One example concerned the implementation of semantic functions via smart software. Yahoo’s super wizards insisted that Yahoo’s approach was better and smarter than Google’s. I didn’t think so because Google was ** using ** semantics as an embedded function, and Yahoo was trying to convince me that its engineers were smarter than Google’s. Yahooligans, it is not about IQ and college connections. The subject is the implementation of core technology about search in a cohesive manner. Yahoo’s view of search was not in line with my view of search.
Yahoo Had Many Search Systems, Not One Search System
In one briefing I did when I was a rental for an outfit called Gerson Lehrman, I recall talking with a couple of superstars from a New York big name investment banking firm. This outfit somehow ended up with me in a conference room talking about my cost analysis of Yahoo’s many search systems. I had a PowerPoint slide in 2007 that listed these search systems: [a] a license for InQuira natural language processing system for customer support, [b] Flickr search which ran on the tough-to-scale home brew system that Yahoo purchased, [c] the Stata Labs’s email search system, [d] the Delicious.com search system, [e] whatever was left of the Inktomi search system which I used for the original FirstGov.gov search system in September 2000, [f] the search system for Yahoo News, [g] the Yahoo shopping search systems (note the plural), and a couple of others. The point on the slide is that it is really expensive to maintain, scale, and innovate across different and complex search systems. I recall vividly that these 25-year-old MBAs from colleges with great PR programs told me that the costs of search were irrelevant. Wow! That was stupid then and it is stupid now. Yahoo’s promiscuity in search doomed it to be a loser in findability. Forget the customers. Think about the expense and opportunity cost the Yahoo view of search created. Microsoft has “inherited” this problem, and it has left Yahoo the company it is today—a portal.
Wrap Up
I can understand why the Yahooligan top management team does not see Yahoo as a search company. Yahoo was a human-built directory. A directory is about “findability”. Search is one component in findability. Most people—including the management of Yahoo—don’t understand what Google has done in the last 11 years. As a result, the Yahoo logic is to say, “We don’t do what Google does.”
Since Google is essentially a search company, the Yahoo logic makes it clear to them I suppose that Yahoo has never been a Google. That is a valid observation.
In short, I care about search. I don’t care about Yahoo’s version of the portal approach to information. I think the Yahoo presentation of its new positioning is quite significant:
- Yahoo has essentially conceded vast amounts of conceptual territory to Google. Google is search and it is now Microsoft’s problem to figure out how to deal with Googzilla
- Yahoo may be able to develop a sustainable business for the consumer user of the Internet who wants to navigate to one place and get information about television, sports, the weather, and finance. AOL could pose a threat to Yahoo and I ask myself, “Why do we need both AOL and Yahoo?”
- Yahoo’s cost problem is going to have lasting repercussions. Stepping away from some engineering costs, operational costs, R&D investments in search, and the administrative and management drag of search will help some. But the expense of the search system legacy at Yahoo will hamper the company going forward unless more stringent steps are taken and taken quickly.
In Harrod’s Creek, we see the new Yahoo as the same old Yahoo with a management team that has to control costs while keeping pace with the changes perturbing the datasphere. Was passing on that Microsoft buy out offer evidence of how Yahoo’s interprets its world?
Stephen Arnold, August 8, 2009
E Mail that Deletes Itself
August 8, 2009
Short honk: Want to make your email self destruct? Navigate to the Vanish page. A unit of i2 in the UK was exploring this function but the company moved resources elsewhere. Useful for some; not so useful for others.
Stephen Arnold, August 8, 2009
SchemaLogic and Vamosa Link Up
August 8, 2009
SchemaLogic, a vendor of a metadata management systems for unstructured data, has a deal with
Vamosa, , an “information logistics” software solutions company that practices enterprise content governance. Governance appears to be the “new” term for processes and principles involved in the movement and manipulation of unstructured content: e-mail, documents, images, etc. that make up the bulk of a company’s data assets. Think of it as TQM for information management. So the partnership will create a one-stop shop for companies in the market to organize and govern their data across unrelated sources. SchemaLogic and Vamosa are stepping up the game of enterprise data collection and analysis; they’re truly going beyond search. More detail may be found in the Document Media story “Vamosa Forms Technology Partnership with SchemaLogic.” More search and content processing repositioning ahead we goslings presage.
Jessica Bratcher, August 8, 2009
Bing Objectivity Questioned
August 8, 2009
I saw “Bing Search Tainted by Pro Microsoft Results”. It is tough for me and the goslings to get too excited about this. Hit boosting, term weighting, and quite a few other old-hat, run-of-the-mill tricks are what make search engines chug along. Run some queries with offensive language. The author is Shane O’Neill, and I think he makes some good points, but fiddling with results is not news. Suggesting that Google is not using tweaks for certain queries is interesting. My research suggests that most search systems permit tuning by humans or by smart software in reaction to certain inputs. Sigh.
Stephen Arnold, August 8, 2009
Amazon Losing E Book Grip
August 8, 2009
Mark Long’s “E Book Market Is Shifting Away from Amazon’s Target” puzzled me. Amazon “kindled” the e book frenzy. Sony has missed the shrimp boat again. Its new models don’t have WiFi. The Sony e book store is a crazy place. Amazon’s Kindle store looks positively elegant when I examined both. Mr. Long reported:
Amazon’s dilemma is that the next wave of potential customers is more likely to “buy and borrow books from multiple sources, as opposed to buying lots of books online,” Rotman Epps said. And this could spell big trouble for the market leader should its rivals elect to make moves “to better serve the later waves of adopters who don’t have as strong a relationship with the e-commerce giant,” Rotman Epps said. Moreover, demographics aren’t the only challenge Amazon faces. “Open platforms are also an effective strategy for battling Amazon,” Rotman Epps said.
Let’s assume these data and the statements of the consulting firm are spot on. My thought is that books are not going to be the money makers they have been since the olive and wine press was put to work smashing out words on paper. Right now books are quite a bargain. The number of remainders and used books on offer in a town which prefers basketball and horse racing to reading is remarkable. If I want a book deal, I can get a “used” book on Amazon at prices I find tasty.
The shift from books is not likely to be stopped with long form content shifted from print to electronic forms. Clay tablets are not too useful for reading. An art fair has clay with writing on them, but Babylon’s favorite form of recording corn harvests won’t be making a comeback.
Mr. Long makes some good points. Too bad books seem to be a method of sharing information that appeals to very narrow segments of the US population. Cheap Kindle type devices won’t expand the market. Neither will more sources of e books.
Stephen Arnold, August 8, 2009
The Google May Have Nothing to Fear from Micro-Hoo
August 7, 2009
The Business Week Web site’s story “CMO Poll: Google Has Little to Worry about form Yahoo MSN” contained an interesting sentence: “I think Yahoo will regret doing this.” The goslings have a different view. We think Microsoft will regret taking this step. The cost burden Microsoft has assumed will make the expense of refitting Fast ESP technology look like pocket change. Two huge search cost hits may be too much even for the $65 billion in revenue that Microsoft brings to the search party.
Stephen Arnold, August 8, 2009
Funnelback, Squiz, and Content Management
August 7, 2009
Funnelback, http://funnelback.com/index.php, an enterprise organization search engine technology and services company, is now part of Squiz, http://www.squiz.co.uk, an enterprise software development company. This will combine Funnelback’s Software as a Service (SaaS) and enterprise-wide hosted search solutions with Squiz’s open-source content management system. A PR push is underway to help the companies unite; Funnelback is particularly focused on overseas expansion. “I think that there is massive potential for the enterprise search market to grow dramatically from what it is currently,” said David Hawking, Funnelback’s chief scientist, in a video interview at http://www.squiz.co.uk/resources/blog/cmsdebate-davidhawking. “I think as soon as people realize that there are effective solutions to the problem that they’re all grappling with, then the market will expand enormously.” So as Funnelback has the opportunities of this new partnership, will it embrace Squiz’s open-source CMS more tightly, or will they stick with proprietary plans? Funnelback is looking the gift horse right in the mouth, it just needs to take the reins. The goslings here in Harrod’s Creek think that this view is one more example of search vendors rotating into more lucrative markets via a positioning move.
Jessica Bratcher, August 7, 2009
Google and the Open Source Card
August 7, 2009
Digital video is a high stakes game and only high rollers can play. Hulu.com has the backing of several motivated outfits with deep pockets. Smaller video sites are interesting but the punishing costs associated with dense bit media are going to be too much for most of these companies over the next couple of years.
Google is committed to video. A big chunk of the under 40 crowd love to fiddle with, wallow in, and learn via video. I don’t, but that does not make any difference whatsoever.
There are two different views of the Google acquisition of On2’s video compression technology. On one side of the fence is a traditional media company, the Guardian newspaper. You can read “Google Buy Up Will Help Cut YouTube Costs.” The idea is that Google is not making money via YouTube.com. Therefore, the all-stock deal worth about $110 million gets Google some compression technology that will reduce bandwidth costs and deliver other efficiencies. The On2 technology also has the potential to give Google an edge in video quality. This is an AP story, so I don’t want to quote from the item. I do want to point out that this on the surface seems like a really great analysis.
On the other side of the fence is the viewpoint expressed in The Register. Its story “Is Google Spending $106.5 Million to Open Source a Codec”?” is quite different. Cade Metz, a good thinker in the opinion of the goslings here in Harrod’s Creek, wrote:
But if you also consider the company’s so far fruitless efforts to push through a video tag for HTML 5 – the still gestating update to the web’s hypertext markup language – the On2 acquisition looks an awful lot like an effort to solve this browser-maker impasse.
Mr. Metz sees the On2 buy as a way for Google to offer an alternative video codec which sidesteps some issues with H.264 and other beasties in the video jungle.
In my opinion, The Register is closer to the truth that the Guardian. Google is playing an open source trump card. Making open source moves delivers two benefits. The first is the short term solution to the hassle over video standards. Google offers an attractive alternative to the issues described by Mr. Metz. The second advantage is that Google reaps the benefits of contributing to open source in a substantive way.
Open source is a major threat to Microsoft and some other enterprise software vendors. Google is playing a sophisticated game and playing that game well in our opinion. The Register’s story gets it; the Guardian’s story does not.
Stephen Arnold, August 7, 2009
Handicapping Bing
August 7, 2009
Channel Insider ran an interesting article “Will Yahoo Microsoft Deal Make Bing the Next Big Thing?”. The article raised an issue I had not thought about in depth. Channel Insider stated:
According to Hitwise, Google had 74 per cent of the online search market share in June, with Yahoo and Bing trailing far behind at 16 per cent and five per cent, respectively.
Let’s assume that this Hitwise “number” is accurate. If I sum Bing’s share and Yahoo’s share of the search market, I get 21 percent. The balance of six percent share flows to other companies running independent Web indexing operations.
Here’s what brought me up short. Most of the other Web search systems are either human powered like ChaCha and Mahalo or metasearch engines which use the indexes of Google, Microsoft and Yahoo. I recall Internet superstar investor, entrepreneur, and pundit Jason Calacanis saying on a Twit podcast or being quoted on a Twit podcast that one percent share of the Web search market is worth a billion dollars.
Mr. Calacanis may have been talking about the “value” of a percentage point in Web search market share in terms of a payout over a five or 10 year period. My hunch he was, but I want to take his statement literally and apply it to the data in the Channel Insider write up.
Let’s assume that Google has a 74 percent share in the Web search market and, therefore, perhaps should be a bigger revenue producers; for example, a $74 billion company. It is not and won’t be for at least another 36 to 48 months if luck and the economy remain on Googzilla’s side. We can take the same $1.0 billion metric and apply it to Yahoo. Shareholders should be smiling about Yahoo’s generating $16 billion in revenue. Yahoo’s in a revenue pickle for sure. At this time (Summer, 2009) Microsoft is a solid $65 billion plus company. At least $5 billion should be coming from its Web search business. In my experiences, unspooling Microsoft’s revenue detail is a tough job. I would suggest that Microsoft’s various Web search initiatives have not generated a total of $5 billion in the five years.
My question, silly as it is, becomes, “Where’s the missing money?”
First, I think the Calacanis estimate is interesting but a bit on the upside of the teeter totter. The Industry Standard’s chart (now somewhat long in the tooth) shows that most of Google’s revenue comes from Web advertising. My research suggests that this ad revenue is linked to Google’s search system.
Source: http://www.thestandard.com/news/2009/01/22/picture-guess-where-google-gets-97-its-revenue
So, 97 percent of Google’s $23 billion (est.) revenue is about $22 billion. Juggling the numbers in my head suggests that one percent of the Web search market for Google translates to less than $1.0 billion in revenue for the search giant.
Second, Microsoft’s recent search deal with Yahoo may show an informed decision. Instead of spending the $40 to $45 billion of the now infamous Yang deal, Microsoft is keeping cash, getting share, and taking on staff and operational costs. These costs will be punishing, but the good news is that the price tag is likely to be less than buying Yahoo in its entirety. The bad news is that with a percentage point or two uptick in Web traffic for Microsoft may not be the billion dollar bonanza the Calacanis estimate suggests.
Third, what happens if Web advertising softens? Both Google and Microsoft will take a hit. Microsoft already has a solid revenue base from its server and enterprise software lines of business. Google gets a harder shot to the liver. Google, therefore, will have to make real headway in the enterprise in order to avoid a slow down in growth or a decline in revenues.
My hunch is that Bing will not be the next big thing. Even if it gains share, the likelihood of a suppression in ad revenues either from price cutting or a general downturn will put pressure on Google. Google will have generate significant revenue from its enterprise sales. That may be a tall order in the short term.
I think the handicappers should focus on the Google, not Bing.
Stephen Arnold, August 7, 2009
Google Gets Serious about Enterprise Sales
August 7, 2009
I saw an announcement in PCWorld that provoked a happy quack here in the mine drainage ditch. I have long been a critic of the Google for making it darned hard for a prospect to get a Googler to sell them something. If you have tried to call Google to buy something, you know that you had to work to get a call back. One of my clients told me a year ago, “We are a big company and I can’t get anyone to return my call. What’s with that outfit?”
Navigate to “Google Offers On-Site Services to Search Appliance Buyers” by Juan Carlos Perez. Most of the Google watchers, pundits, and experts have not paid much attention to this story which was released on August 5, 2009 on the IDC news service. The program is called ROI JumpStart. The “ROI” is important because Google is making its marketing hook for this big enterprise leap one composed of value. The “i”, according to PCWorld, represents “information”. Ah, return on information. Let me translate: “i” means value from what makes a modern organization run. Mr. Perez wrote:
The two-day service engagements will be provided by Google approved partners with expertise on Search Appliance configuration, deployment and training, Google said. The ROI JumpStart offer runs until Sept. 30. Although the ROI acronym usually stands for “return on investment,” Google uses it in this promotion to mean “return on information,” since the Search Appliance is designed to help employees find a wide variety of corporate data more easily.
Now those who want to buy something will be referred to partners who can sell, integrate, and return phone calls.
Google intentionally moves at a glacial pace, putting its forces in place, and setting up its chess pieces for a game changing approach to enterprise sales. The idea is that if you move really slow and incrementally adjust lots of discombobulated actions, people can’t figure out what is going on. Google, therefore, surprises lots of folks. Here in Harrod’s Creek, we have learned how to monitor Googzilla, so we are not often surprised.
Image source: http://creoleindc.typepad.com/rantings_of_a_creole_prin/images/checkmate.jpg
Who are the Google partners who will become Google’s feet on the street? How will the enterprise sales program unfold? What is the method for connecting a potential buyer with a partner? I don’t have any details. What my years of research into the Google have sensitized me are:
- This is a ** very big and important step ** for the Google
- The partners have been hand picked for their ability to be Googley and deliver sophisticated technical solutions. Partners do return phone calls and understand the methods of traditional organizations.
- The pent up demand for organizations who want to go Google has reached critical mass so partners will be in a position to intermediate between the organizations hungry for Google solutions and the GOOG itself.
In short, I anticipate an explosion in Google enterprise revenue and the realization that Google has taken baby steps, moving slowly to put in place a potent sales and customer service organization that is the polar opposite of traditional enterprise software sales.
The Google is now moving with extreme prejudice. If some of Google’s targets of opportunity don’t know the meaning of that phrase “extreme prejudice”, in my opinion, the meaning will become crystal soon.
Stephen Arnold, August 6, 2009
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