Is Microsoft Targeting the Wrong Search Company? - The Down Side
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When it comes to running a business, I’ve heard plenty of discussion about the pros and cons of concentrating on one or two core strengths. I’ve also heard plenty about the pros and cons of diversifying. I’m not sure myself which approach is better, and I’m willing to grant that either one can work, given the right market and the right execution. That said, Yahoo!’s “all things to all people” plan could cause it to stumble in the future.
Wharton marketing professor Xavier Dreze believes Yahoo!’s attempt “to own as much as possible” risks creating a lack of focus. “Everyone knows what Google does; it’s a search engine. We know what Google is good at, but Yahoo is less clear. If Yahoo keeps trying to be all things to all people, it could become vulnerable.” Indeed, according to ComScore Networks, Yahoo!’s share of the search market currently trails Google’s by nearly ten percentage points.
On the other hand, it’s worth keeping in mind that the Internet pie is constantly growing. In fact, Microsoft, Yahoo!, and Google could conceivably build perfectly fine businesses without seriously competing with each other. It won’t happen, in part because Microsoft and Google seem to be naturally competitive, aggressive companies. But it’s still a good thing to remember, as Kendall Whitehouse, senior director of information technology at Wharton notes. “The Web isn’t a zero sum environment, so it’s not a simple matter of whether Yahoo or someone else will win.”
Still, it’s interesting that Yahoo! has managed to not appear to be a threat, despite dipping its fingers into every pie. Even if it loses its focus, that could help save it in the long run, when Microsoft and Google finish tearing each other apart. Whitehouse sagely recalls history when he observes that “By focusing on being a media company and a content delivery platform, Yahoo may be able to stay out of Microsoft’s crosshairs longer than some of its competitors. And history has shown that the consequences of tackling Microsoft head-on can be dire.”
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