The big news over the weekend is
the publication of an internal memo by Yahoo senior VP Brad Garlinghouse, dubbed the
‘Peanut Butter Manifesto’. The crux of it is that Garlinghouse says Yahoo as a company is
unfocused and has too many product lines that cross over. Here is how he described
it:
“I’ve heard our strategy described as spreading peanut butter across the myriad
opportunities that continue to evolve in the online world. The result: a thin layer of
investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should.”
To stretch the peanut butter metaphor a little, Yahoo’s peanut butter consumption is
making it unhealthy and flabby. So like Garlinghouse, I think Yahoo needs to trim down their product portfolio. I’d go as far as to say they need to ‘kill off’ their web 2.0 brands. But before I explain why, first a little comparison with Google…
Google eats peanut butter too, but it is muscling up!
The funny thing is, the ‘peanut butter’ issue is exactly Google’s problem too –
remember a few weeks ago when Google CEO Eric Schmidt admitted publicly that Google had
too many products and was trying to do too much? The difference though is that Google
continues to set the financial world on fire, with its massive and still growing
advertising revenues. Google’s peanut butter consumption is actually resulting in bigger
forearms and more chiseled abs!
Meanwhile Yahoo has had some much publicized hiccups in the financial markets – which
the NYTimes
nicely summed up today:
“The main problem is that Yahoo has not been nearly as good as Google at reaping
profits from the huge volume of search traffic it attracts. Yahoo’s search revenue
in the third quarter was $191 million, versus $911 million for Google…”
In a nutshell (pun intended): Yahoo is the biggest web property in the world, with
more traffic than Google. But when it comes to revenue, Google has more.
To be fair though, Google has also promised to cut down its peanut butter intake – ref
Eric Schmidt’s call for
“more features and less products”, which means Google is re-focusing on improving and
integrating its current products. Does Yahoo need to do the same?
Products: Integrate web 2.0 into mainstream
From the product angle, Garlinghouse neatly summed up Yahoo’s predicament:
“We end up with competing (or redundant) initiatives and synergistic opportunities
living in the different silos of our company.
– YME vs. Musicmatch
– Flickr vs. Photos
– YMG video vs. Search video
– Deli.cio.us vs. myweb
– Messenger and plug-ins vs. Sidebar and widgets
– Social media vs. 360 and Groups
– Front page vs. YMG
– Global strategy from BU’vs. Global strategy from Int’l”
There’s a good argument to be made that Flickr doesn’t cannibalize Photos, because
Flickr is used by the early adopter crowd and Photos by your Mom or Pop. That’s very
true, because there is still a big gulf between the blogosphere and the mainstream. My
feeling though is that Flickr’s technology should be utilized more in Photos -i.e. why
not re-brand Flickr as Photos. I can hear the gasps of horror from early adopter Flickr
fans (of which I am one). But these are the kinds of hard decisions which Yahoo probably
needs to make.
Yahoo could also try and re-brand Photos as Flickr, but that is a more risky
proposition – and may I say, not Yahoo’s style. They are well known as a tech company
that straddles both mainstream and early adopters, very successfully. Far more
successfully than Google, whose innovative Gmail application (for example) is still only
used by a relatively small percentage of people.
If there’s one thing I’ve consistently admired about Yahoo over the years, it’s that
they are quick to pick up on and action the latest web tech trends – but at the same time
keeping their huge mainstream user base happy and comfortable. If you look at how they’ve
integrated RSS into their products – MyYahoo, news, mobile, email – they’ve done that
extremely well and without scaring off non-technical users. Now, I’d love to see Yahoo
integrate other ‘web 2.0’ technologies into their mainstream product range – Flickr into
Photos, del.icio.us into myweb, etc.
I’m over-simplifying here of course – Yahoo is a very big and complex company and
things are never this easy. But when it comes down to it, I love to see the latest in web
technology being integrated into products that real people actually use. That has
traditionally been one of Yahoo’s biggest strengths, so I can’t see any reason why they
shouldn’t continue to do that, even if it means killing off the individual web 2.0 brands
they acquired. Notice I said kill off the brands, because it’s the technology in Flickr, del.icio.us, etc which is of most value to Yahoo now.
