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"Google is the dominating chip stack"

By - October 11, 2006

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That’s a quote in this rather bleak piece on Yahoo in today’s Times. The context? Google owns the table in the poker game that is online media. How about this excerpt from Saul’s piece:

“Yahoo has lost the favor it enjoyed a year or two ago,” said David Cohen, a senior vice president of Universal McCann, a media buying agency of the Interpublic Group. He said his clients were reducing the share of their budgets they allocate to Yahoo in favor of newer sites, like MySpace, and sites developed by big media companies like Viacom.

“There are more players in town, and the others are closing the gap relative to the things Yahoo is good at,” Mr. Cohen said.

But the problems at Yahoo go beyond advertising. From video programming to social networking — areas of interest to users and advertisers alike — the company is losing its initiative. And each time a product fails in the market or is late, Yahoo loses some ability to do more deals and hire more talented employees. The shares are down 38 percent this year, sending some employees out the door in search of better shots at stock market wealth.

Google, in the meantime, is taking advantage of Yahoo’s problems to cement crucial deals that could make its rival’s recovery even more difficult.

Ouch. More when I can say more. But I have to say this: Fortunes rise, and fortunes fall. Yahoo’s been here before. Google? Not so much. I’ve seen go go go – Apple in the mid 80s, Microsoft in the early 90s, Netscape in the mid 90s….and Google is on an extraordinary run – go go go for going on four years now. But that’s hardly a dynasty…yet.


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6 thoughts on “"Google is the dominating chip stack"

  1. Joe Hunkins says:

    Ouch. Maybe I shouldn’t have bought Yahoo stock but … I’m still very bullish. Who is doing the best 2.0 stuff by far? Yahoo. Who is the biggest site in the world? Yahoo. Who’s serving up more vid streams than Google Video and Youtube *combined*? Yahoo!

  2. John says:

    Joe – who prints more money than Yahoo!? Google…

    John – Who prints more money than Google – Microsoft – $1 billion a month in PROFIT. Apple is stronger than ever. We’ll see if Yahoo! can rebound – I doubt it. It’ll be interesting to see if and when Google stumbles… As for Netscape…Long Live Netscape!

  3. Thanks for this post. It’s too bleak an article. Some good points about Yahoo! being slow to move, but there are some really good core assets a Yahoo! that are not likely to be overtaken by others in the market anytime soon. News, Mail, IM – these are very strong areas for capturing eyeballs and Yahoo will always be able to take advantage of that and add to it’s balance sheet with these products and services.

    As you astutely note, 4 years for Google – it’s definitely NOT a dynasty.

  4. Jeremy says:

    Definitely not the best outlook for Yahoo. This article is a little on the negative side. Keep in mind that while Search is certainly a cornerstone of Yahoo, it’s far from their sole money-maker.

    They still have Yahoo Autos, Yahoo Real Estate and HotJobs just to name a few. Additionally, the real money is (and continues) to be made leveraging those millions of user profiles and email addresses for customized messages. As Newman from Seinfeld said, “When you control the mail…you control INFORMATION.”

  5. Howard Owens says:

    When it gets down the final table, the Chip Leader rarely wins.

    Even heads up, incredibly short stacks can mount amazing come backs.

    Skill and luck are equal factors.

  6. Anupam Jain says:

    Emerging as one of the biggest players in information revolution, I am surprised how Google has changed my life in the last couple of years.

    - Anupam