Wednesday, April 23, 2014

Yahoo's Strategy for the future

Yahoo, once dubbed as force behind explosion of internet, is languishing behind its main competitors. The total valuation for the company in third quarer of 2012 came down to $9 billion, from $128 billion during heights dot com bubble. In 2012, Yahoo’s board of directors have taken a significant step towards its revival by roping in Marrisa Mayer, former google search and mobile executive, as the C.E.O of Yahoo. Ever since Marissa took the office, Yahoo has been on an acquisition spree during which it has reportedly spent around $2 billion.
  
Yahoo's mobile services

The acquisitions include an impressive list of mobile-based startups alongsideTumblr, Xobni and Aviate etc. A closer look into these seemingly random acquisitions, some of them include startups with utter lack of revenues, would reveal strategy Yahoo is planning to pursue in the future. Yahoo, being a web-based company itself, identified that its future growth would be driven by its mobile-based products and search. In addition, Yahoo, which was once a very attractive place for high quality engineers during late 1990’s and early 2000’s, is finding it difficult to attract high quality creative and engineering talent. This formed the genesis behind Yahoo’s Red Ocean Strategy of Acqui-hiring, where it started acquiring companies with expertise in building innovative mobile platforms, to compete in mobile space. The employees of these acquired companies would then be locked in a 2-4 year contract with Yahoo. This is reflected in the fact that Yahoo has closed down 31 out of 38 startups acquired under Marissa’s leadership.
Aviate, personalized mobile platform service

Aviate's flagship features

Alongside making strides towards positioning Yahoo as a mobile-first company, Yahoo has also focused its efforts towards ‘Search’. Through its acquisition of Aviate, a contextual mobile-based platform which learns about users behaviors and displays applications at the right place and right time for the users, Yahoo is seemingly betting big on contextual search, which it believes is the future. If Yahoo manages to bridge mobile services with contextual search, it would be able to provide true personalization to its users which goes beyond intuitive. This would also ensure that Yahoo will remain competent in web space, where companies like Google, Facebook and Amazon etc are currently dominating. Whether Yahoo manages to convert its Acqui-hiring into substantial results will remain to be seen. 

-Bharath

References:-
2) venturebeat.com/2014/01/07/let-the-2014-acquisition-spree-begin-marissa-mayer-reveals-yahoos-acquisition-of-aviate/

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