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Comment by sachinag | Hacker News Reader

I think he's incredibly wrong, and I'm surprised by it because he founded Weblogs, Inc. and should know better.

Yahoo is now a media creation and curation company. Yahoo Sports is number one, Yahoo News is top five (HHS Secretary Sebelius had an exclusive op-ed in YN yesterday), OMG is killing TMZ and others, and so on and so forth. Yahoo's strategy of original content and great curation is all about stickiness. Let's be clear - Yahoo will still sell the very best ads for themselves, and Microsoft gets that sales expertise as well. No one on the face of this earth sells premium online ad space better than Yahoo.

Yahoo has clearly decided that they won't play in search any more, and that's a rational decision - they only played in search for a small period of their history. They were powered by Inktomi before Google, and now will be by Bing for the next ten years, and presumably something other than Bing after that.

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Fantastic analysis. But where's the money? The point of Calcanis' piece is that the Borg only gets (buys?) its way into markets which are big or growing.

Whilst there is no doubt Yahoo is strong in some areas, he's saying Yahoo has thrown-in the towel in the big fat one. He argues that Yahoo had more than one chance of being a player in search and each time they fluffed it. All the current focus-on-core-strengths talk doesn't cover up the fact that they blew the big one. That's his point, and I think it's a very valid one.

"But where's the money?"

It's not in search, as far as Yahoo is concerned. Having gigantic teams dedicated to tweaking search algorithms and running servers was obviously not working out to Yahoo's advantage in the long run... they were losing market share to Bing, and who knows how much they were spending to try to innovate in search? As far as I know, they've been losing money on searching for a long time.

Is Yahoo ever going to be rolling in money again? No, and maybe not ever. However, they have a metric ton of products that can generate revenue: commercial licenses for service APIs, cloud computing resources, etc, and now they'll be focusing more on their advertising (which is REALLY where the money is these days). As far as staying afloat as a company not raking in the big dollars, this was probably the best bet without some major upheaval. They can focus and develop and sell things that actually might have a chance at making some money.

Bing on Yahoo search results pages is a product endorsement. Users will become familiar and comfortable using a Bing branded product. Bing Sports is a text ad on the current "sports" search results page. It'll go from, WTF is Bing to, "oh Bing, they have sports news"

It is like BMW switching to Toyota engines and putting a little sticker on the dashboard that says Powered by Lexus. How long will BMW last when that happens?

"It is like BMW switching to Toyota engines and putting a little sticker on the dashboard that says Powered by Lexus. How long will BMW last when that happens?"

Unfortunately, that analogy just doesn't work in the car industry. People will still buy the BMW because it is a BMW.

To back it up, I'll give you a two real world examples, both to do with another car Manufacturer - Porsche.

When Dr Ferdinand Porsche first created his company, his Porsche 64 was created using many parts from the VW Beetle.

From my personal experience, back in 2002, I was helping my brother strip down his 1986 Porsche 944 turbo to be raced in 03.

While pulling the car down, I noticed that many of the parts were manufactured by Audi and VW (which admittedly owns Audi). Even while we were stripping the sound proofing material off the body, I found out that the body of the car was manufactured by Audi, which to me was very surprising (given the body was one of the main selling points of the car at the time, even Mazda ripped off the design for the RX7).

If I had to give a rough breakdown in parts, I would have said that particular model was a 3-way split when it came to who's parts were in the car.

As for Porsche's company performance, they are one of the strongest car brands worldwide and definitely one of the most profitable, in 07 having made 5.8 Billion Euro profit off of 7.3 Billion Euro in revenue.

Currently, the only thing that is causing them headaches is their financial acrobatics, not the fact that their cars are made out of other manufacturer's parts.

So unfortunately, your analogy just doesn't hold up.

Things made in the same place aren't necessarily made to the same standards. I once packed strawberries - for the major supermarkets in the UK and for M&S in the same packing line. The M&S quality standards were higher, we removed more "uglies" and used more evenly sized strawberries.

The point: same line different production values.

Porsche 911 Turbo: ENGINE BY VW

or - Your 130 thousand dollar automobile is made by the same people who make your kids 15 thousand dollar automobile.

It would turn a lot of people off Porsche and boost VW's brand image.

I think many people are aware that major brands OEM parts from all over.

But there isn't a sticker on the dashboard saying one of the most expensive parts is from a specific maker.

My main point is that Yahoo is transferring a lot of brand equity to Bing. If there was no Bing branding on the SERPs then this would be much less of an issue.

And really, some hackers pop the hood and look at engines but really do most people? Do most people even know how to change their own oil or even bother to?

Yes, but you miss the point.

People own these luxury vehicles BECAUSE of the status associated with them, not because of who produces what parts for the car.

So the analogy comparing the Yahoo situation to BMW was a bad one, which was my point - I wasn't trying to say it was a bad move by Yahoo.

Time will tell on that one.

I think we're disconnected on this because my point is that branding Yahoo results pages with the Bing logo is horrible for Yahoo.

And yes, while luxury brands use many parts not specifically made by them, they do not promote another brand who is a competitor.

Another analogy maybe? If the Apple iPhone had a splash screen that said "Powered by Microsoft" it would harm the brand. Apple knows this and while my mac is powered by Intel, there's never any "Intel Inside" branding.

"It is like BMW switching to Toyota engines and putting a little sticker on the dashboard that says Powered by Lexus. How long will BMW last when that happens?" Could not have said it better.

That happens all the time. Pop the hood on a Mazda 6 - there is a Ford motor inside. GM and Toyota built cars in the same factory (albeit, its shutting down now).

"Yahoo is now a media creation and curation company"

Oye. Isn't that what AOL was?

It was clear that Yahoo never planned on being a search company when they passed on buying Google. And you're definitely right: Yahoo operates much better as a destination site. But in terms of media creation, Terry Semel and his Hollywood crew was brought on for that and it was just a waste, treading waters, not grabbing YouTube, not grabbing Facebook, flubbed on creating a better search ad product, etc.

They should have just worked it out with AOL last year.

Just looking at the homepages of Google vs. Yahoo - it's clear that Google's focus is search. On Yahoo's home page, search is just a feature on a page littered with tons of bandwidth hogging widgets.

But Bing is clearly a search engine. That's the central focus and that's what people will remember. It might not be "top of mind" for most of us but it's going to be top of mind to a lot of Yahoo users soon enough.

The market's immediate reaction: "Yahoo Shareholders Transfer $2.9 Billion To Microsoft Shareholders" - http://bit.ly/yn2TT

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