I know they have a random collection of services (news, photos, mail), but if they were to disappear tomorrow, would anyone really care?
Every morning I go in and look at the dashboard, which shows the email addresses of the last 10 new signups. About 6-7 is gmail, 1 yahoo, 1 hotmail. There's usually 1 that's a custom email like from an unknown domain.
I don't have hard stats as I don't have access to the user db, but I've been playing this game for 1+ month every morning, and it's the same pattern all the time. This is for early adopters.
Also, from personal experience, most of my acquaintances, whether technical or not, are migrating from yahoo/hotmail to gmail. It's pretty common for me to have to remove somebody's old yahoo email address from my contacts because they finally got a gmail address.
The Yahoo pitch may not be important for people who use Yahoo mail, but it matters to investors, and most of all it matters to recruits. What should Mrs Meyer say to people to make them want to work for Yahoo?
They valley makes fun of them because the valley doesn't value profitable businesses, the valley values consumer craze for a product.
They also own flickr, which I'm sure you knew.
I am quite certain that people would care if these things, along with their @yahoo.com email addresses disappeared tomorrow. I'm sure you knew this too, because email is central to our online lives at this point.
So okay, you actually do know what yahoo does. What you don't know is their purpose. Google's purpose is to index all the worlds information (and then slap ads on it, but first one, then the other.) Apple's purpose is to make really great products, and then market them so well that people think they're even greater.
So, given what we know yahoo has, what's a consistent product story they could tell that would answer the question that comes up again and again?
The mere pursuit of profit is always fatal in the long term because it's essentially a short-term outlook that leaves you rudderless.
Look at the car industry as an example. Toyota has been consistent in its pursuit of customer value, respect for staff, and waste reduction, with profit coming way down the list of priorities. GM, on the other hand, is where the modern increase-shareholder-value school of management originated. Toyota is now the world's largest car company, and GM would have died without a government bailout.
"Maximize shareholder value" is not a company. A company needs vision, it needs to do something or build something. A company needs profit, and preferably lots of it, yes, but it also needs a guiding philosophy that informs the markets it enters and the ways it enters them. You can call it "marketing fluff", but it's what makes the company what it is. For the best companies, profit is part of the vision, but it does not subsume the vision.
Google and Apple are both very successful companies, but they're both very different. You can deride the difference between them as marketing fluff, but I call it "successfully executing on vision."
That's an incredibly reductionist view
Maybe with 2nd or 3rd generation leaders Google et al will be maximizing shareholder value for the sake of maximizing shareholder value. But not yet. They're still doing what their founders want them to do.
But you're right, it seems like an obvious strength to capitalize on.
An 'internet portal' is still very valuable to non-techie users: it provides them a reasonably structured way to access internet services and goods. My email? Here. Stock? There. News? All over the page. Photos? You got it. Chat? Games? Calendar? The weather? Search? As long as it's good enough, it's right there so, sure.
Of course, no future-looking company wants to compete in that market with their own similar product, so until that space gets completely 'disrupted' (what Google tried to with by ripping it to pieces) or 'reinvented' (social networks being the latest incumbent) or completely 'moved' (to a different access model like mobile), many people will continue existing solutions like Yahoo.
We recently released one of our Facebook games on Yahoo. The numbers were not groundbreaking or headline material, but it still surprised us that they were meaningful.
I like some of the products which have come from Yahoo like their JavaScript libraries and YSlow toolkit. However, there are alternative (and in most cases better) options for those libraries so I don't really know what I need Yahoo to do for me.