Bronte Media

Economist Couldn’t Be More Wrong Over Yahoo

August 17th, 2005

They say you only hurt the ones you love. Well, there is only one publication I love: The Economist. And so it was disappointing to see their ‘profile’ of Yahoo in this week’s edition. 

The story breaks down as:

  1. Some moron MBA students entered a competition by a strategy consulting firm and Google won. They made fun of Yahoo.
  2. Google’s stock price has done spectacularly well.
  3. Bill Gates and Steve Balmer only talk about Google. Therefore in the end it will be MSN and Google (No note of how MSN has made *zero* inroads into either Yahoo or Google since Bill said that Google kicked their ass in Davos).
  4. MSN and Google hire engineers and Yahoo hire ‘media’ people. This is bullshit. Even excluding the premise that engineers are better than the mysterious ‘media people, the majority of Google’s employment growth has come in their sales and marketing team. Read the 10K’s people! MSN similarly are hiring hundreds of marketing and sales people ahead of their AdCenter launch. Not to mention Yahoo making some big engineering hires of late.
  5. What of Google’s ‘focused’ product strategy? Gmail is the most fantastic email app ever written but it has made little inroads into Yahoo mail and Hotmail. There are high switching costs for most users. Aside from this, we have groovy maps, voyeuristic satellite photos and a Brazilian drug dealing network. Extremely cohesive!
  6. Yahoo has lost the plot and is unfocused because they struck the Alibaba deal. I am not saying the transaction will work out as anything to do with China has a ridiculous valuation but the core assets - auctions (whether b2c or b2b) - are one of the two tenets of online business (advertising and commerce). Further, auctions are a media version of retailing - you don’t need any inventory but you make great money putting people in touch to transact. Nothing unfocused about that.

The one underlying premise I found to be fundamentally irritating is that Yahoo is about to enter into a decline. In a secular sense, everyone is going to enjoy fabulous growth (as the article had to begrudgingly admit when referencing Yahoo’s financials). Second is the overestimation of MSN. They have smart people and they are making the right movements but they have not done anything yet. That is the unproven, not Yahoo’s trajectory.

But I still love you, The Economist.

3 Responses to 'Economist Couldn’t Be More Wrong Over Yahoo'

Subscribe to comments with RSS

  1. John said, on August 17th, 2005 at 11:55 am

    According to a Forbes article from yesterday, Yahoo! is also closing the gap on Google in terms of customer satisfaction. From the Forbes article:

    “According to data to be released today by the University of Michigan’s American Customer Satisfaction Index (ACSI), Yahoo! has scored an 80, out of a possible 100, in the e-business ACSI, up from 78 last year, while Google ranks an 82.”

    Here’s a link to the article: http://www.forbes.com/ebusiness/2005/08/16/google-yahoo-satisfaction-cx_ld_0816google.html

  2. will said, on August 18th, 2005 at 11:18 am

    same man, i was pretty surprised to see such a cack analysis by the normally extremely astute Economist.
    lol at moron MBA students :)

  3. Bronte Media » Let’s Hope the Economist Reads the WSJ said, on September 22nd, 2005 at 9:32 pm

    […] Either way, I hope The Economist had a chance to read the article. It might have helped them before writing the utter crap they did about Yahoo.   […]