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  • Writer's pictureJeff Matthews

Visualize the World’s Largest Virtual Parking Lot

Yahoo Feels Breath on Neck It’s Still the No.1 Portal, But Rivals Are Closing In

—New York Times? So said last week’s New York Times? in a fascinating look behind the curtain at the formerly hot internet property whose official name is “Yahoo!” but which the Times? has unilaterally changed to “Yahoo,” without the exclamation point.

Perhaps this insouciant act by the editors of the Times? is a sign of Yahoo!’s declining importance. Or perhaps it reflects the massive cost-cuts rippling through the ranks of “Old Media” properties—no more fact-checkers, for example. Or perhaps it is simply because the fact-checkers at the Times? are over the age of fifty and thus do not know the correct spelling of the internet’s “No. 1 Portal.”

Whatever the reason, I’m going to use the actual name of the firm in question, which is “Yahoo!,” not “Yahoo.”

And I’m going to call the newspaper whose article triggered this piece the “New York Times?” instead of the “New York Times.” After all, if the editors of the world’s most self-important newspaper can be indifferent to getting the name of a major corporation right, why should they mind if I don’t bother?

In any event, the Times? article got right to the heart of the matter in the second paragraph, summarizing what appear to be Yahoo!’s major strengths:

Yahoo would seem to have a strong hand. It is the world’s most popular Web site, with more than 400 million monthly users…. It has top Web properties in areas like e-mail and music. And its management team, led by Terry S. Semel, a former Hollywood executive, is well regarded for its skill and financial rigor. And, on the surface, all those points are more or less correct.

Mr. Semel certainly did a terrific job steering the company out of the Internet Bubble collapse, turning Yahoo! into a profitable and important franchise. And while Yahoo! does have widely used email and music platforms, I don’t know anybody with a “” email address. Nevertheless, 400 million monthly users is indeed a heck of a lot of “users.”

So why is Yahoo! flailing around? Why, as I write this, is the online Wall Street Journal reporting that the world’s “No. 1 Portal” is having trouble closing a deal to buy Facebook—the only decent social networking site available, now that YouTube is owned by Google and MySpace is safely ensconced within the corporate umbrella of News Corp, whose crafty CEO, Rupert Murdoch, acquired that social networking website a year and a half before Viacom Chief Sumner Redstone learned what a “social networking” website was and began flailing around, King Lear-like, exiling poor Tom Freston from his increasingly irrelevant Old-Media kingdom?

Why, in short, with all the advantages of having been the “first mover” in Internet-land, is Yahoo! so publicly failing to get with the program?

Perhaps it is because what Yahoo! really is is this: the world’s biggest virtual parking lot.

Let me explain. Right now, on the Yahoo! front page, I can click on buttons for mail, messenger, radio, horoscopes, weather, “local” (whatever that means), autos, finance, games, GeoCities, groups (whatever that means), HotJobs, Maps, Movies, and yadda yadda yadda (figuratively speaking). Not only that, but there’s a news story headlined “Why did giant camels die off?” as well as an ad for the new Robins Williams movie. Meanwhile, on the front page of Google, there’s a handful of catagories (such as maps and video) above the simple search box. And that’s it. Compared to sleek, simple Google, the front page of Yahoo! reminds me of one of those cars—generally an old Volvo—going 40 miles an hour in the middle lane during rush hour that has so many bumper stickers covering every square inch of available space that you can’t actually read any of the individual bumper stickers except the green and blue one that says “Visualize World Peace.” Which is ironic because what you tend to be visualizing when you see that bumper sticker is not how beautiful it would be if Arabs and Israelis could only find common ground in their struggle for human self-actualization by having a giant reconciliation ceremony in a field of day lillies above the Gaza Strip. No, what you tend to be visualizing at that moment is this: How cool would it be if my car had a machine gun in the muffler like James Bond’s Aston-Martin so I could blow away the scumbag in that souped-up red Acura flashing his lights and tailgating even though it’s bumper-to-bumper traffic? But I digress. Like that old Volvo and its confusing mass of bumper stickers, the front page of Yahoo! probably turns off as many people as it attracts. Me, I check the weather on Yahoo! and then go to the nice, simple Google page to do search.

And I suspect that I am not alone. The Times? story gets this, noting:

Yahoo may well be slipping because of the sheer scope of its ambitions. It competes in news with CNN, in sports with ESPN, in e-mail with Microsoft, in instant messaging with AOL, in social networking with MySpace, and of course in searching with Google. To the Times?’ brew of skeptical inquiry, a Yahoo spokeswoman sniffs, “Of course growth will slow when you already reach one out of two people on the internet.” Yes, and growth will also slow when those people you’re reaching are, for the most part, using the parking lot for free. Not going inside the store.

Jeff Matthews I Am Not Making This Up © 2006 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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