Yahoo! Profits and Search Engine Revenue Streams

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Yahoo have posted record Q1 2005 Financials [pdf] today, of which Gary has a good summary of the important bits, and Charlene Li looks at Yahoo! vs Google revenue streams...

The inevitable comparisons to Google come up -- Yahoo! doesn't have the search traffic and publisher network that Google has, and so lags in search revenues. But what I like about Yahoo!'s strategy is the robust nature of it. It can tap into multiple revenue streams -- especially emerging branding dollars that come with video and rich media ads. In contrast, Google is a one-trick pony (albeit, it's a very nice looking pony!)

She's not the only one to have made that observation of course, but pointing it out makes me think that it would only take one large pin, to pop the Google bubble. If the same pin were used on Yahoo, it would hurt for sure, but they'd almost certainly survive, Google on the other hand....


One pin?

Interesting discussion. I've actually been thinking a lot about the differences between Yahoo and Google. It seems to me that comparisons may be valid at face value, but in nature, the approach of each company is fundamentally different. Yahoo's seems to be proprietary, whilst Google is more open-source-like.

It strikes me that Yahoo's succes is built on appropriating technologies and IP and doing the sensible thing with them, which is a noble and valuable pursuit, and certainly makes the bottom line more resilient.

However, Google strikes me as being successful not because of what it knows, but who it knows -- i.e., its ability to tap into all the content and functionality available on the WWW, and give people quick and easy access to it. They don't have to tend the whole shop, so to speak, they just have to be able to find other people who are tending their own respective shops.

Google's model is almost more of a service model, versus the product model of Yahoo. And while Yahoo has more direct control over its specific properties (and continues to acquire more), I think there's real strength in being able to not carry the overhead of maintenance and continued evolution/exploitation of technologies, but rather seek out individual "pods" of clever, creative groups who can and do.

So, whilst Yahoo=fabu at this point in time, I predict that the mounting internal mass of acquisitions will ultimately prove too cumbersome to exploit in a nimble (and web-like) manner. Google may quite possibly win out, because it lets the other websites and technology providers of the world do their thing, whilst they concentrate on just finding a great way to connect people with them.

I think it's going to take more than one pin, to bring down Google.

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