Yahoo! Takes a Page From Google's Playbook
Maxwell is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It has been a long time coming, but finally someone is taking Yahoo! (NASDAQ: YHOO) in the right direction. What is even more interesting is that Chief Executive Officer Marrisa Mayer is doing what some of her predecessors have tried to do in the past. But, I believe she will succeed where others have failed because of her renewed focus on mobile strategy, and cutting some programs in order to pour resources into areas that will be more profitable.
What is happening in the world of search
Looking at the single area of mobile search strategy, it is clear that Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG) are headed in the right direction. Microsoft’s Bing recently surpassed Yahoo! in the line of ‘most used search engines’, second to Google. However, this is not the only reason why these two companies have beaten Yahoo!.
In today’s world, consumers don’t want to be tied to a desktop to answer questions. Indeed, when it comes to driving directions, local restaurants and reviews, etc., these things must be available on the go. Because of this, search engines have gone mobile, supplying the smartphone world with their own version of easy-to-use functionality for searching the web.
Small screens, limited touch display devices, and options for speech input have made this a challenging task. Consumers can have little patience for irrelevant search results for movie show times, or bad directions to somewhere they want to go. What's more, it is now expected that such results also easily feed into other functions. For instance, searches for movie times must now allow options to see reviews and trailers, or the ability to buy tickets immediately.
Bing attacks this challenge by focusing on the attractiveness of its interface. The search app highlights the same image the user would see if he/she was on a computer. The list of search options such as images, videos, maps, and deals is handy for quick sorting. Searches launched from the video page will yield only video results, and so on.
Microsoft has always been ahead of the curve on voice recognition. Thus, it was no surprise that Bing offers an almost seamless integration of the voice recognition software with the mobile search. In addition, Bing automatically changes to its search page once the user begins typing, so the auto-complete function can begin automatically. This effort to allow the user to get where they want to go, with as few keystrokes as possible, is one of the solid indications of the company’s clear-minded focus on customer service.
Google’s approach uses the search history so as to minimize keystrokes to find a highly viewed site. This is augmented when users use their ‘Google+’ account. It also makes it more friendly for the smartphone user by allowing access to the host of Google services, including Docs, contacts, Blogger, and Google Earth.
Yahoo! has long struggled with both functionality and appeal. Rather than showing the user’s search history, the home page for the app displays trending topics, a strangely useless option to be greeted with. It also forces the user looking for directions to an external app, such as Google Maps or Verizon’s VZ Navigator. Advertising ones rival shows either incompetence or apathy on the part of the leadership.
How Mayer changed directions
Yahoo! is the only big tech company (or even mid-sized tech company) that has seen an unsettling five CEO’s in the last six years. From resumé blunders to failed attempts at revitalizing the company, any leader would have a tremendous challenge ahead of them.
It was Marissa Mayer who took the helm last year. With many years at Google as their first female engineer, she helped assist in the launch of such products as Gmail, Google Maps, iGoogle, and the Google homepage. This is a big plus for Yahoo due to the fact that few leadership competencies are as potentially powerful as technical/professional expertise. Having a leader with deep expertise provides employees faith that he/she understands and fully appreciates the problems and potential solutions.
Mayer can put her personal expertise to optimal use, and is doing so by focusing Yahoo’s mobile strategy on the two main areas for consumer approval: functionality and aesthetics.
In addition to this change, Mayer is also leading her company into a time of ‘trimming the excess’. According to a statement, Yahoo! is discontinuing development and support of its mobile app for BlackBerry and Yahoo! Clue. Mayer understands that streamlining processes is a necessary step for Yahoo!’s survival and growth.
There’s no question that the way the company handled cuts in the past (both programs and employees) isn’t likely to fill anyone with confidence about its grasp of the real-time nature of public relations and communications. Even so, shutting down some programs, such as its app for Blackberry and its Avatars (which the company hinted it’s looking to sell or hand off to someone else) makes eminent sense for the company.
In addition, Mayer’s decision to end telecommuting is taking a page out of Google’s playbook. Seeing what worked from her tenure as a top executive at Google, that collaboration spurs creativity, proves not only her vision but her strength of leadership. The ability to communicate with others quickly and bounce ideas around spontaneously is lifeblood for a tech company, and this move seems less about imitation and more about application of sound business principles.
As the leader, Mayer is responsible for continuing and growing the livelihood of Yahoo's employees, and earning a return for the company's stockholders. I believe she has the knowledge, technical experience, and the vision to do it.
Summary
On the horizon, I see positive movement for Yahoo! as Mayer is doing the right things the right way. With its new mobile strategy and streamlining some processes, I believe its time for investors to take a fresh look at this stock. In addition, one should also include Google and Microsoft for a solid portfolio based on the usefulness of their products, and the strength of leadership from both companies.
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