Thursday, August 25, 2005

Yahoo Ad System Crashes, Still Down� And Other Things

"Yahoo search spokesperson Gaude Paez told MarketingVOX Wednesday evening that the upgrade caused 'unexpected issues,' and that their engineers were working around the clock to fix the problem. "

I read the other day where people at Yahoo were working under Death-March conditions to compete with Google and this may be one example. I wonder if it is true.

One thing that appears to be different about Google, so far at least, is that people their are NOT working ridiculous hours and killing themselves to "beat" anybody.

They are also regularly releasing new products and features that lead the pundit class to ask: "what is the catch?"

Well, of course the catch is advertising. Google sells, to my knowledge only three things, advertising, the Google box, and items from the gift shop. Clearly the main thrust is the advertising model, unlike Microsoft that makes most of its money, not on selling copies of Windows, but on new PCs being sold with copies of Windows already installed. Unlike Yahoo who has a more mixed bag of advertising, for-pay software, and joint marketing deals.

In a way, Yahoo is in a sweet spot between Google and Microsoft. If the way Microsoft is doing things is right, then at least Yahoo is half-right, and if the Google model makes more long-term sense then Yahoo is far out ahead of Microsoft in making the transition.

Microsoft's biggest concern has to be that the notion of an "Internet Appliance" will catch on in a big way and people will be demanding a turnkey system that cannot be "hacked" and for which they do not have to buy frequent software updates. The jig is up on the unwritten pact between Microsoft and Intel where that latter builds faster and faster hardware as the former build slower and slower software. There is a limit on how bloated you can make a system and still have it behave predictably, and that limit was passed long ago by Windows.

Microsoft has a great deal in place, for as long as it lasts. Other than pleasing stock analysts, I can't see why any of these three companies should be panicked. But rumor has it that Yahoo is.

So, I asked myself, from a management perspective, what it is that Google is doing right with respect to the other two?

I think the answer to this is that they are not asking themselves "what is the catch?" They are not worrying at each stage of development "how does this new product or feature mesh seamlessly with all the others so as to lock users into using only Google products?" To me that is Microsoft's biggest weakness, a well deserved reputation for locking users into their products often quite against their will. Yahoo, as the "in-between" company does a bit of this too. I MUST use a web interface to use Yahoo mail (for free anyway) which means I pretty much must use their address book and calendar too. I'm forced to see the Yahoo ads, but can totally avoid them with at least some of the Google solutions.

As far as software for the PC, Google is releasing everything for Windows first (not a stupid move), but they are also promising Linux and Apple versions, and in a few cases have started to deliver such.

My guess is that nobody at Google is particularly focused on what order their products come out. "When they are finished" is probably as good a strategy as any, whereas in Microsoft's shoes, you don't want similar products stepping on one another's toes, and for maximum lock-in, order of release, and outright product suppression can be important strategies. It must be tough to work your heart out on some new feature at Microsoft and then find that the feature must be held back for marketing rather than technical reasons. I don't think such frustration exists at Google. At Yahoo, however, there is clearly some frustration these days. Why else would a major change to the advertising software go into production without adequate testing?

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