2008: Yahoo's year to forget

Looking at the online giant's performance over the year

With Y OS, Yahoo pledges to open all its sites, online services and Web applications to outside developers, and give users a "social profile" dashboard to unify and manage their Yahoo services. Yet, Li faults Yahoo's leaders for taking too long to articulate that strategy: Y OS was announced in late April.

Meanwhile, Google continues dominating search, and its position continues to strengthen, at the expense of Yahoo and Microsoft.

In the third quarter of 2008, Google nabbed 28.4 percent of all online ad spending in the U.S., up from 25.4 percent in the same period in 2007, according to IDC.

By comparison, Yahoo had 12.5 percent in 2008's third quarter, down from 13.3 percent, while Microsoft's share increased slightly to 6.7 percent from 6.1 percent in 2007's third quarter, according to IDC.

In the search segment specifically, Google's share of spending has increased from 50 percent to 54 percent in this year's third quarter, while Yahoo's has dropped from 14 percent to 13 percent. Microsoft also saw a decline of 1 percentage point to 6 percent.

In display advertising, Yahoo's forte, the company has been unable to build on its leadership position, with its share falling 1 percentage point to 16 percent year-on-year in 2008's third quarter. Microsoft held on to second place and improved its share to 12 percent, up from 9 percent. Google, a nonentity traditionally in this segment, grew its share from 1 percent to 3 percent.

Looking ahead at 2009, Li sees in Yahoo a company with many valuable assets but with a management culture that needs a shakeup.

"Can Yahoo become much more flexible and fluid? It has a chance, though it's going to be very hard," Li said.

"My goodness, any company would love to have their user base and their technology," Li added. "Yahoo needs to get out of its own way."

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Juan Carlos Perez

IDG News Service
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