Keith Watanabe * NET 2.0

Currently, Yahoo has their own form of social networking....Yahoo 360.  It's another attempt by Yahoo just trying to emulate what's already out there based on their existing services (which is too similar to what MySpace provides or rather the other way around).  Yahoo's primary strong point is their user base and their name value.  However, as smaller, more agile companies creep up, Yahoo attempts to replicate those areas.  At the moment, as I've mentioned in the past, Yahoo's only strategy has been "toss something against the wall and see if it sticks."  Obviously, this is the worst business model or strategy around, especially if you add a "copy to compete" factor.

With regards to social networking, I think Yahoo is wasting time and money investing in this area.  The area is too competitive and overfilled with sites that add little value between each other, except in terms of minor differences or a specialty focus.  But the numbers provided on the article from TechCrunch are hard to rationalize and force a major company like Yahoo to really put this kind of effort into a social networking company.

Naturally, Yahoo needs to re-think what their identity truly is.  Before they "were the internet."  However, now, they are an amorphous mass with little add value per service except for major acquisitions which may share their user base and infrastructure.  Perhaps, this is where Yahoo may serve a real purpose: infrastructure.  If they are the internet, their business plan might be in large scale infrastructure support.

And what I mean by infrastructure support should not just be hardware and networks, but the APIs, redundancy, experience and capital to allow start ups to stay competitive.  Like a company that provides the tools to build companies.  They have their developers network, which is a nice start.  But they need to provide more.  Here is a suggestion to Yahoo to refocus their business strategy in terms of specific services they can provide to improve their image:

- Allow the use of an Open ID type of scenario.  Yahoo has a plethora of registered users.  Making the Yahoo email address as the central point for smaller companies to manage their infrastructure would reduce the need for companies to develop authentication systems.  Add value services on top of this would be options to increase security (SSL certificates, image verification, authorization schemas)
- An improved ad supported system that is flexible.  Be less restrictive and improve the model.  The bidding method was a great way to make money.  But the quality of ads and the ability for people to control the types of ads on their websites require improvement.
- Provide the hardware, network redundancy, clustering and diverse hosting options.  For instance, allow one to use Apache, PHP, mod_perl, Ruby on Rails, Tomcat, JBoss, IIS that is pre-setup and multiple permutations depending on the need of the company.
- Increase the number web services to allow companies to create new mashups.  Maps, weather, stock quotes, news items, etc. are great starts. However, these must be increased and diversified to provide developers greater flexibility and companies to emerge and generate creative businesses to propel the internet into web 3.0.
- Begin contributing to major open source APIs to improve stability in development.  Apache, PHP, mod_perl, etc. should be key investments that Yahoo enters rather than attempting to continuously build competing development tools.  The reduction of languages and APIs and the improvement in the stability and functionality within these APIs using Yahoo's monstrous infrastructure as the testing ground should be a key focus for the company.
- Provide legal consulting services for start up companies.  Perhaps a true service would be to create an automated legal consulting service that takes out the middle man and provides questionaires (a la TurboTax) to provide companies ways to generate their own businesses without being forced into hiring their own lawyer.
- Provide automated venture capital to allow people to quickly get their ideas up and running without the hassle of the normally bureaucratic and competitive area of going to VCs or banks in getting money.  For example, start a program where a person wants to generate a new service and gets anywhere between $50-$1000 per month automatically after going through an online questionaire that determines in the end how much a person can receive.  Other internal services like advertisement, shopping carts, etc. would be provided as part of the services to help redirect some of the money back into Yahoo in a guaranteed way.  Naturally, an idea like this is high risk, but Yahoo's coffers are deep and buying people left and right without a strategy is no different in some ways than what I'm proposing above (except to the anal retentive symantics freaks).

Part of what I'm suggesting above is just standardizing some of the areas that I see many companies rebuilding over and over.  Yahoo probably has some of the best practices nailed down so providing these best practices as  a form of business would be better than forcing each company to reinvent the wheel time and time again.  Also, it'll lock down how things are down better and allow businesses to truly focus on the core problem of making money through the internet.

If you go over the timeline for Yahoo, you can see a pattern emerging:

- Yahoo 1.0 - directory service
- Yahoo 1.5 - massive portal
- Yahoo 2.0 - massive copy cat, with no sense of identity
- Yahoo 3.0 - confused and directionless

Forget the economics of keeping this line of business or getting rid of these other lines of business.  A company should have a real vision and sense of culture.  Without this, no one can really go up to that company and understand what that company does.  Yahoo's identity is so twisted because they attempt to do too much for everyone.  But their purpose is twisted as well: do everything because they think they can do it better?  Do everything because it really helps society?  Do everything because they just want to increase their money?

I can't fathom how Yahoo can increase their traffic anymore than they realistically have.  This is something Yahoo doesn't really need to improve their business model.  Instead, Yahoo needs to utilize what they have and provide it to people.  The main assets of Yahoo are their experience, infrastructure, reach, traffic, and variety of services collected into numerous lines of business.

Yahoo 3.0 should not be confused and directionless.  Yahoo 3.0 as I present it needs to be the Internet platform.  It has to go back to Yahoo 1.0 where the focus was on providing services to allow other people to show up since no service was around at the time to collect this information.  And it'll come full circle by being not just a directory of services, but a pure information service provider, linking in the nodes of experience to the next generation of developers and businesses.

This ought to be Yahoo 3.0.

Forget social networking.  It's just a phase of the internet.

The bigger picture has always been information and services.