Google takes aim at My Yahoo (GOOG, YHOO)

Includes: CNET, GOOG, YHOO
by: David Jackson

Google announced a beta version of a personalized home page. This is an important development because it dispels any final doubt that Google, Yahoo and MSN are truly on a collision course. Here's Google's announcement, three reactions to it and some quick analysis:

Google's announcement:

A method to our madness
5/19/2005 02:58:00 PM

Posted by Marissa Mayer, Director of Consumer Web Products, and Jessica Ewing, Product Manager

Does Google have a strategy, or are we just a bunch of mad computer scientists running around building whatever we want? Today this question gets an answer: we've launched our personalized homepage via Google Labs. It's part of a strategic initiative we refer to as 'fusion' to bring together Google functionality, and content from across the web, in useful ways.

The personalized homepage is a complement to the existing Google homepage - not a replacement. Keep using the original Google homepage if you want to. (We expect many people will.) But if you're keen to organize and customize your information, take a stab at designing your own homepage. You can add Gmail, news, stocks, weather and more. Plus you can add great content from websites like the BBC and Wired. We're incorporating feeds from just a few other sites today, but we envision being able to accept any standardized feed very soon.

Enjoy, and let us know what you think!
(Article here.)


Charlene Li

Why is Google doing this? Is this a concession to the strength of portal competitors? To a great degree, yes. Of the people who use Google most frequently to search the Interent, only 17% also have Google as their default home page – compare that to 72% that use MSN for search and also have it as their home page... The biggest advantage that Yahoo and MSN (and yes, AOL) have is that they each have tens of millions of registered users. This is important if these sites want to be able to provide differentiated services to their users. In the end, it’s all about loyalty – and offering a better service thanks to personalized services will the differentiator.

But why would people give up a rich interface like Yahoo, MSN, or AOL for Google? I believe that only Google loyalists will do so.
(Full article here.)

Danny Sullivan:

The new page will no doubt make many people scream "Portal!" That's because despite the name, it is essentially a "My Google" service, similar to the My Yahoo, My MSN and other My pages that portals created so their users could access the many features they offer.

Well, Google's already been a stealth portal for some time, offering standard portal features such as email and home page (blogs), as I've written before. The page is merely a visible acknowledgement of this.
(Full article here.)

Yahoo's Jeremy Zawodny:

Imitation and the Slippery Slope of Portaldom: My Google

There's a radical idea! A customized home page with a search box at the top. Innovative! Whoever thought of the product is a world-class genius! What next, an IM client? Web hosting? A Calendar?
(Full article here.)


1. Not priced-in to the stocks. The Internet technology commentators are right that this development was predictable; but that doesn't mean it's insignificant for investors. The sentiment reflected in Yahoo, Google and Microsoft's stocks does not adequately reflect the fact that those companies are increasingly competing with each other. Remember, 18 months ago that wasn't true: Google was a search engine, Yahoo a portal and Microsoft a provider of desktop software. Now the focus of all three companies is increasingly the means to access content.

2. Google avoids content aggregation and ownership. A key aspect of Google's product strategy was missed. Here's a quote from the AP press release:

"We really hope to have this not necessarily be a platform ... but rather to help users navigate the Web better," said Marissa Mayer, director of consumer Web products for Google, referring to the notion of portals being "sticky" and retaining Internet users for extended periods.

"Our philosophy is we want to get people off the Google site" and onto sites that give users the information they're seeking, Mayer said, noting that news content in the test version of the home page is aimed at that philosophy.

This is the key difference between Google and Yahoo: Google does not want to own content (other than sticky applications tightly related to search functionality like maps), whereas Yahoo does. Note that Yahoo recently hired key people for its technology content business away from CNET (ticker: CNET).

3. The content-owning portal is dead. Which of these approaches will be more successful? Personalized home pages will consist of (1) the next-gen communications/personal publishing bundle (IM, web email, address book, permission-based access blog etc), (2) sticky information applications (maps, weather, show times etc.) and (3) other content via RSS. Morgan Stanley analyst Mary Meeker argued that Yahoo is a net beneficiary from RSS. I disagree: RSS allows millions of small category-killing web sites to compete with in-house content from Yahoo, MSN and CNET. That benefits Google's business model and undermines Yahoo's.

GOOG chart below.

Full disclosure: at the time of writing I'm short CNET.