Lessons Learned from Yahoo's Mistake

Yahoo was a phenomenon, but no longer. What is its problem? Jeff Jarvis had a fairly good summary about Yahoo's mistake by comparing the declining Yahoo and the rising Google. He pointed out that "Google is a platform. Yahoo is a portal. Google is a network. Yahoo is a destination. Google is a tool. Yahoo is a thing."

Yahoo still follows an old and out-of-date philosophy---controlling web resources and making profit based on the dominating power. Yahoo tries to be a portal, through which normal web users can access the public web. Yahoo at present is still trying to win back its dominating position of being the leading portal that web users can get best information from the Web only if they pass through the gate of Yahoo. Unfortunately, however, this dream is out of date.

In short, portals are out of date. This claim is, however, not the same as Jeff's "portals are dead." Out-of-date at here means that constructing portals is hardly still a good way to make money. For non-profit purposes, however, building portals certainly remains being a simple and convenient solution.

Portals are out of date because they are "destinations" and "things" rather than "networks" and "tools." By being either destination or thing, a portal is a site that is independent to users' participation. For example, Yahoo plays like a dictating nanny who believe that she could fully represent all the babies. As an web-entry portal, Yahoo answers user requests and barely facilitating mutual information exchange between information requesters and providers. This is a standard Web-1.0 style of design.

With emergence of Web 2.0, Google has started changing its role from a traditional web-entry portal to a central hub at a distributional network. Google continuously provides new services to allow web users building their own sites and facilitating information exchange among these sites. As the result, Google develops a network of Google users. The ones who join this network automatically make Google to be the central hub due to that Google is the service provider, but not because Google is the gate to the public web. This role change makes Google be more user-friendly. In users' eye, Google is not a dictating nanny, but a kind big brother. Users are happy to join and share information using this friendly network. This is a typical Web-2.0 style of strategy.

Old institutions die hard. Certainly Yahoo is still one of the leading web companies at present. But if its basic strategy about who it is would not be upgraded soon, its leading position is going to be shaken greater and greater. Using an old Chinese idiom, a big bug with one-hundred legs must not die soon. Unless something deadly happens inside its body, one can hardly kill such a bug in real. This strategic mistake, however, is a deadly internal reason to Yahoo.