Yahoo! – Essential move

Eliminating other sign ons is essential for recovery.

• Yahoo! has moved to remove booth Google and Facebook from its properties as it will son require users to use a Yahoo! login to get access to its services.
• This means that everyone who wants to use Yahoo! internet services will have to have their own account with Yahoo! in order to do so.
• This will be a gradual process where users are coaxed into Yahoo! over a period of months.
• The official line is that this will improve the user experience but this is much more about monetisation than it anything else.
• Without a user profile, Yahoo! cannot learn anything about that user and therefore is unable to earn a return on the services that it provides for free.
• This is the same as failing to have a home grown offering for a certain Digital Life service and is the equivalent of giving a paid subscription away for free.
• Hence, while some may see it as detrimental to the user experience, it is something that Yahoo! has to do if it is to begin making a return on the assets that it has gathered over the last two years.
• Furthermore, I think that integration of Digital Services is going to be very important.
• This means that all of the services that an ecosystem offers know about each other with a single sign on and are able to contribute to a single user profile.
• This is how an ecosystem builds up a complete picture of the user and is able to serve him much more relevant marketing.
• This is key to making a return on Digital Life services and at the moment only Google is able to do this.
• For Yahoo! to achieve this lofty ambition it must migrate all of its users to its own login system and integrate all of its services together.
• Finally, it must migrate these services onto mobile devices in a fun and easy to use way in order to migrate the incredible loyalty that it has in the fixed world into mobile.
• This is the task that faces Yahoo! management but progress to date has been very slow.
• Fortunately, the market’s focus on Alibaba has given it time to get its house in order but as the IPO approaches that grace period is beginning to run out.
• Yahoo! remains my top pick as any recovery in the core business has been effectively discounted and the ever increasing valuation of Alibaba offers downside protection.
• However, to see a real return on the shares management needs to execute as pretty soon the market’s attention will turn back to the core business.
• Yahoo! still has some time but that time is beginning to run short.