Yahoo?: Business on Internet Time By Girotte and Rivkin
Timing is now everything • What is the difference between strategy and tactics in Internet time? • Strategy used to be long term, maybe 3 to 5 years. Can you keep a strategy that long when competition changes their offerings weekly or monthly?
Competitive Landscape • @Home acquires Excite (Yahoo!’s arch rival) • Offered high-speed cable access to the Internet • AOL acquired Netscape • Netscape owned a browser • Netcenter was popular portal • Disney took stake in Infoseek • NBC allied with SNAP • Lycos was in merger talks
When do you change strategy? • When KSFs change. • When customer requirements change. • When competitive requirements change. • When other assumptions/requirments change.
Yahoo!’s Strategy • Provide one-stop access to anything that someone might need. • Find anything • Locate anyone • Buy anything • Generate revenue from advertising and deliver users to vendors’ sites.
Internet & the WWW • Started by DoD for military and its vendors in 1960s. • HTML standard set in 1991 for describing computer documents. • Browser developed in 1994 by James Clark (Netscape founder). • By 1999, 100 million Internet users, and 43 million host computers & 367 million PCs on the Web.
Portals “Second most meaningless word in Netspeak” • Search engine spiders found latest Web sites (Lycos, Infoseek & Alta Vista). • Navigation sites classified Web sites like libraries classify books (Yahoo! & Excite). • News, sports, stocks. • Email and personal home pages • Auctions, shopping, financial services. • Chat rooms and communities
Portal Customers • Non-paying users of Portals (48% men, 34% women, 18% children). • Searching • Communicating • Exploring • Corporations paying to attract sale of products and services (display ads or links). • $2 billion in 1998 (52% through portals) • $5 to $200, main page vs targeted placement • 2% to 30% referral fees
Portal Suppliers • Information providers, like news, get monthly fees ($2,500 to $20,000) • Advertising media (50% of revenues spent to build brand awareness) • Labor ($100,000 to $200,000 for programmers) • Technology for financial transactions, email and instant messaging, & home page development tools.
Leading Portals Yahoo! AOL.com Excite MSN Lycos Infoseek Netcenter Snap • Access • Providers: • Broadband • (Media One, @Home) • Dial-up • (AOL, AT&T Worldnet) • Wireless • Direct at Work Customers Require: PC Modem Subscription • Vertical Sites: • Techn news • (CNET, ZDNet) • Sports • (ESPN) • Personal finance • (Quicken.com) • Mass Content: • 43 million connected computers Set default Portal Other Sites Subscribe to Access Provider Go to Vertical Site of interest Consumer buy PC & modem
Yahoo! Results • Bring people together for content, commerce, communications, and community offerings. • My Yahoo! With tailored ads, chat rooms, and news wires. • Country specific portals. • 167 million page views per day in 12/98. • 50 million viewers • 2,225 companies buying ads
Yahoo! Properties Common look and feel • Navigation properties to find relevant information (categories of information). • Community properties to facilitate contacts and communication (address book, email, chats, message boards). • Personalization properties (MyYahoo! for personal links). • Electronic Commerce Properties (shop, travel, real estate) • International properties (local language and sites)
Yahoo! Operations • Tight space helps communication and keeps costs down. • Organization (Exhibit 11) by expertise • Property development: (Production, Engineering, Surfing) • Marketing and Sales: (Business development, Brand marketing, Sales) • International • Partnerships for distribution (like AT&T WorldNet, E*Trade, NPR, Fox sports)
Yahoo! Planning • Stay 60 days “ahead of the competition”
Competition (Exhibits 13 & 14) • Access and Content Providers • AOL/Netscape has largest captive market of 14 million subscribers (Netscape had been late to set up a Portal) • MSN (2 million subscribers) imitates AOL (deal between AOL to use IE as default, for AOL on desktop) • @Home/Excite (330,000 subscribers) accessed 19 cable providers passing 60 million homes
Competition • Portals with Media Partners • Disney/Infoseek were 8th and 9th most popular sites. • NBC/Snap accessed CNET, MSNBC and CNBC. • Independent Portals • Lycos Network with HotBot search engine • AltaVista takes DEC’s search engine public
What future actions? (Exhibit 13) • What new partners? Suppliers? Customers? • What new features? • What content providers? • What capabilities? Security? Transactions? • What acquisitions? • What income streams? What future strategy? When will you know it?