I just happened upon a post over at Read/WriteWeb commenting on Umair Haque’s assessment of Google versus Yahoo!. In short, Haque’s feeling is that Yahoo! does not innovate in these markets, they merely purchase companies that do, and then they don’t understand the market well enough to innovate. Google does innovate, creating value at the edge of the market. MacManus’ question is “Is Yahoo! creating new value chains?”
It’s always hard to be the innovator. You burn through cash, you have millions of false starts, and you sometimes look like you don’t have direction. It’s much easier to be second. You watch what works for the market leader and then you do it better and quicker, before they get to it. Is Yahoo! actually an imitator, or is it coincidental? Do they lack competence in these markets, or are they just taking a different approach to dealing with them? Do they leave companies they acquire alone, because they respect what the company is doing (which is why they bought them), or because they’re scared of disrupting something? Is ‘yes’ the answer to both of those questions? :-) Is Google the only company at the edge, or is there an edge of the market we don’t appreciate, that Yahoo! is on? Are there sides to this market?
Techies, pundits, and people that operate out on the edge of media sometimes forget that they are out on the edge of things. While there might be new value chains emerging all the old ones are still there, like a huge tail dragging behind the beast. While the front edge is what we all like to talk about because it gets us excited, it’s the sides and tails of the industry where most people dwell. When is someone like my mother going to switch to a pay-per-x model for anything? She, like most people on Earth, doesn’t even have broadband. Her biggest media concern is the death of analog TV broadcasts, and she doesn’t even know it.
Maybe Yahoo! knows something about customers like my mother. She uses Yahoo! Messenger and plays games on their site. She’s not technologically cutting-edge, but she’s more advanced than a lot of her friends, who she’s helped to get set up to IM her (using Yahoo! Messenger, of course). Google’s stuff might be amazing to me, but not to my mother. Yahoo’s stuff is interesting to my mother, because it works, and because she’s not intimidated by it. To me, this is how Yahoo! creates value, especially for folks in the old markets that want to be closer to the new markets without having to worry about whether their Jabber server has S2S enabled.
Google isn’t ignorant of the old markets, either, given their purchase of dMarc. Outside of their ad business they just choose to cater to early-adopters of technology, rather than the mass market. Google’s entry into the radio ad market isn’t a good example of blurring industry boundaries. Google is a huge advertisement business, and they bought another form of it. Sure, there will be some consolidation and collusion (“PodSense?”) but it’s mostly just a good investment and a source of data. The idea of television and visual content delivery might be changing, but radio isn’t. Radio, podcasts, and aural entertainment in general is very successful because people just can’t spare their eyes when they’re driving, mowing the lawn, or walking to work. I don’t see that changing as fast as visual content delivery.
I agree with Om Malik, Google is an advertising company. They dabble in other high-tech ventures by building tools for others to use. Yahoo! is a content provider that looks for the best of the new technology and uses it to help people build content and relationships. Can you compare them? Yes, but carefully. Does Yahoo! create value? Definitely.