It could have been worse. A lot worse.
Many of the companies rumored to be looking at Palm would have bought it mostly for the patents or the brand, and tossed aside everything else. But I think there's a good chance that HP bought the company to keep running it. HP has a long history of activity in the mobile devices market, but hasn't had a lot of knockout success there lately, other than in notebook computers. Palm makes it a player again, or at least potentially a player.
The press release makes it sound like HP was especially interested in the software side of Palm rather than the hardware. WebOS was mentioned six times (compared to one mention of Pre), and Todd Bradley, EVP of the Personal Systems group at HP, was quoted in the press release as saying, "Palm's innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices."
Sure sounds to me like they're planning to deploy the OS across different classes of devices. And tablets were reportedly mentioned specifically in the press conference after the deal was announced.
So overall, I think Palm users and developers should feel good about the deal. Obviously, everything will depend on execution. But at least the company's not being immediately dismantled, which could easily have happened.
Here are some other thoughts on the deal:
Upside for Palm device sales. With HP's huge sales infrastructure, the Pre can move quickly into a lot of interesting places Palm couldn't easily reach -- especially corporate sales, more international markets, and more operator deals.
Ominous news for Microsoft. Between the gains for Android and the Apple-driven trend toward mobile companies owning their own platforms, the market space for Microsoft's mobile software continues to shrink. But more important than that, HP is the number one Windows vendor, and it now owns its own operating system. That's not an immediate crisis for Microsoft, but it should keep someone there awake at night.
Can the old dog HP learn new tricks? Historically, HP has been pretty close to inept in two areas that Palm knows how to run: Managing a consumer developer community, and creating a great user experience by combining hardware and software. If HP is wise, it will keep the Palm teams intact and let them gradually spread those skills to the rest of the company. On the other hand, if HP tries to "help" the Palm folks execute, it will almost certainly drown them in process and bureaucracy.
What is HP's goal in personal systems? The thing that surprises me most about the Palm purchase is that the rumor mill in Silicon Valley said HP was moving away from differentiation in PCs. The company has laid off many of the Apple refugees who had come in to help run the PC business, and the quirky advertising seems to have faded into the background. Supposedly, HP was much more interested in emulating Acer than Apple in PCs. But the Palm deal positions HP as a much more direct competitor to Apple.
Maybe HP sees mobile as a different marketplace, where investment and innovation can pay off better.
PS: I won't even get into the irony of former Palm CEO Todd Bradley now controlling the company again. Let's just say Silicon Valley is a very small place.
Wednesday, April 28, 2010
Sunday, April 25, 2010
Carol Burnett Screenings at The Paley Center For Media
Happy Birthday Carol Burnett!
Carol Burnett will celebrate her 77th Birthday on Monday, April 26, 2010. I don't know about you, but I grew up watching The Carol Burnett Show - featuring Harvey Korman, Tim Conway, Lyle Waggoner and Vicki Laurence. The popular variety show made the stars household names with such sketches as "As the Stomach Turns", "Went with the Wind" (a parody of Gone with the Wind featuring a 
scene with Burnett as Scarlett O'Hara in the dress made from a window curtain, complete with the curtain rod) - Created at the Bob Barker Studios, the Carol Burnett Show ran on CBS from September 11, 1967 to March 29, 1978 for 78 episodes.
If you get a chance, go watch screenings of the show. Take an afternoon to saunter over to The Paley Center For Media. Carol Burnett screenings take place April 21 – 30 (also at 3:00 pm). Admission to these screenings is free.
The Paley Center for Media - located at 465 N. Beverly Drive, Beverly Hills, CA 90210
Wednesday through Sunday, 12 noon to 5:00 pm.
See you there!
C
Carol Burnett will celebrate her 77th Birthday on Monday, April 26, 2010. I don't know about you, but I grew up watching The Carol Burnett Show - featuring Harvey Korman, Tim Conway, Lyle Waggoner and Vicki Laurence. The popular variety show made the stars household names with such sketches as "As the Stomach Turns", "Went with the Wind" (a parody of Gone with the Wind featuring a 
scene with Burnett as Scarlett O'Hara in the dress made from a window curtain, complete with the curtain rod) - Created at the Bob Barker Studios, the Carol Burnett Show ran on CBS from September 11, 1967 to March 29, 1978 for 78 episodes.If you get a chance, go watch screenings of the show. Take an afternoon to saunter over to The Paley Center For Media. Carol Burnett screenings take place April 21 – 30 (also at 3:00 pm). Admission to these screenings is free.
The Paley Center for Media - located at 465 N. Beverly Drive, Beverly Hills, CA 90210
Wednesday through Sunday, 12 noon to 5:00 pm.
See you there!
C
Sunday, April 18, 2010
Lessons From the Fall of Palm
What went wrong?
Palm is now apparently prepping itself for a remainder sale, or new sugar daddy, or some other sort of deal that will change its current trajectory. I wish them well, and I hope they can remain independent and go on to accomplish great things in the future. But whatever happens, it's clear that the current incarnation of Palm has failed. Almost everyone I talk to in Silicon Valley is already speaking of the company in the past tense.
Most of the comments I've seen online blame the company's failure on the high marketing costs associated with selling hardware:
--Ed Snyder, an analyst with Charter Equity Research, told the New York Times: “They poured all their resources into developing a killer product. But they didn’t have the resources left to go to market.” (link)
--Engadget called Palm "a company that has more talent, history, and bright ideas than it has cash and customers." (link)
--Charlie Wolf of Needham & Company told Bloomberg: "It can't get scale. It doesn't have the resources to market the Palm OS and the Pre in a way that would break through the noise." (link)
--Even Palm CEO Jon Rubinstein blamed the problem on marketing challenges: "Palm webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today....However, driving broad consumer adoption of Palm products is taking longer than we anticipated." (link)
The quotes reflect the tech industry's stereotypical view of hardware businesses: They require huge marketing budgets, making them incredibly high-risk, high-cost investments. That's why you see thousands of software startups in Silicon Valley and only a handful of hardware ones.
I think that's nuts. Hardware companies like Pure Digital (maker of the Flip camera) succeeded with virtually no marketing budget. Why? Because they made appealing products that filled a particular customer need. If you do that, hardware is easy to market virally. I think the lesson from Palm's failure isn't "making hardware is dangerous," it's "lack of focus in a small hardware company is dangerous."
I don't want to turn this post into an anti-Palm diatribe. As I said, I hope they survive, and I have enormous respect for the people who work there. But in the spirit of helping everyone learn from Palm's situation, here are the five lessons I think we should all take away from Palm's struggles:
1. Understand what problem you're solving. I asked this question when the Pre was first announced, and I'll ask it again now: What compelling problem does the Pre solve for what customer? (link) It's easy to answer that for successful devices:
--BlackBerry = great e-mail on the go for mobile professionals
--iPhone = the best entertainment and browsing on the go (later extended to include apps)
--Flip = the easiest way to capture video and share it online
What's the short pitch for Pre? Go check the Palm website. As of April 18, it featured three different positionings right on the front page: "Social networking at its best," "Advanced 3D games," and "Work smarter, stay connected." So it's a business / social networking / gaming tool. For all of those millions of people who want to do serious business, 3D games, and Facebook posts all at once.
This isn't a recent problem. At the time of the Pre announcement, Palm advocates described it as a device for people who want better e-mail than the iPhone and better entertainment than the BlackBerry. The implication was that there's a big center to the smartphone market that's frustrated by the lack of a keyboard on an iPhone and the lack of a music player on BlackBerry. Re-read Jon Rubinstein's quote above: "webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today." The assumption there is that millions of customers are looking to buy a "smartphone experience," as opposed to a tool that solves a particular problem.
If that unsatisfied center existed, Pre would have sold like hotcakes.
2. Take care of your friends. When Elevation Partners took control of Palm, the company wasn't just a famous brand. It also had a fairly large base of loyal customers and developers who had stuck with the Treo through a lot of angst and adversity. The new Palm did very little to keep those people loyal. The developers weren't given any way to bridge their existing applications to the new OS. Faced with starting over on webOS or starting over on the much larger iPhone base, guess what they chose. And Palm, which once prided itself on simplicity, made the Treo to Pre migration process into the sort of marathon experience that we used to tease Microsoft about. Here are some of the instructions from Palm's own website (link):
You can find some more discussion here.
This in itself wasn't a disaster. Any company has to set priorities, and Palm just didn't make the links to its legacy customers and developers a priority. But it meant Palm couldn't draw on a pool of friends to help it get sales off to a quick start. That put even more pressure on Pre to be a knockout hit from day one.
3. Move faster and slower. After the Elevation deal, Palm went through a very strange management transition. Jon Rubinstein was installed as Chairman and head of product development, Ed Colligan remained as CEO (so he was Jon's employee and boss at the same time), and Jeff Hawkins was supposed to remain as product guru. Palm said at the time that Jon would be the execution person and Jeff the visionary. "The combination of those two guys is one of the most dynamic... combinations on the planet," Palm said. Yeah, right. The real process was a creeping reorganization in which Rubinstein replaced the old Palm executive team in stages. I think Palm would have been better off with a single quick transition in which the new team was put in place all at once and given time to coalesce.
But if Palm moved too slowly on organizational change, it probably moved too quickly on product shipment. The Pre shipped without a finished development environment, frustrating the developers who were most motivated to create interesting software on it. And it had an OS that hadn't been tuned properly for performance, so even its most enthusiastic users had to apologize for its lack of responsiveness. Although there was a lot of pressure on Palm at the time to ship, in retrospect the company would have been far, far better off if it had waited a few more months and shipped a product that delivered a great user and developer experience.
4. What you do, do well. The old Palm's "zen" design principles said: "Find a problem, find the simplest solution, punt the rest." It was an appliance design philosophy translated into computing. The new Palm tried to boil the ocean. Its ambition to create a smartphone platform superior to iPhone forced it to compete on a very broad range of fronts, everything from OS to SDK to app store to hardware. Inevitably, Palm wasn't able to execute equally well in all areas, and some of the Pre's features were compromised due to lack of resources. Apple can get away with a flawed version one product because it has the financial resources to go back and fix its mistakes. Which brings me to the fifth lesson...
5. You're not Apple. Trying to beat Apple head-on is a rich man's game, the computing equivalent of fighting a land war in Asia. There are effective ways to compete with Apple on a budget, but they all involve avoiding or neutralizing its strengths, and targeting segments or tactics that Apple can't or won't pursue. Instead, Palm attacked head on. I'm picturing that Warner Brothers cartoon where Black Knight Yosemite Sam charges at full speed into the wall of a castle and bounces off flat as a pancake (link).
What it means for the rest of us
You'll notice that I didn't say anything about Palm's bizarre ads featuring a Borg hive queen (here and here). That's because they were a symptom, not a cause. When your product is right, the message will be simple and you won't need creepy ads to stand out. Often you won't need ads at all.
The mistakes highlighted by Palm are common in the tech industry. Here's what I think we should do about them:
--I know there are device companies out there right now where the employees are whispering to each other, "we've committed to shipping on a certain date, but the product won't really be ready." You know who you are. Don't let your company pull a Pre; speak up. If nothing else works, print this post and send it to your boss. The Board of Directors might fire you if you delay the launch, but they definitely will fire you if the product fails.
--I frequently talk with companies that are creating bundles of technologies rather than coherent solutions to problems (anybody want to buy a Verizon Droid? link). Ask yourself, who is my customer, and am I solving a problem that they care about deeply?
--I know investors who say, "I'll never touch hardware, it's too risky." Understand that you're missing opportunities where you could invest with a higher return, because valuations aren't being bid up by competing investors. The fault, dear investor, is not in our product category, but in our execution.
That's my take. What do you think? Where did Palm go wrong (if at all), and what do you think the lessons are for other companies?
Palm is now apparently prepping itself for a remainder sale, or new sugar daddy, or some other sort of deal that will change its current trajectory. I wish them well, and I hope they can remain independent and go on to accomplish great things in the future. But whatever happens, it's clear that the current incarnation of Palm has failed. Almost everyone I talk to in Silicon Valley is already speaking of the company in the past tense.
Most of the comments I've seen online blame the company's failure on the high marketing costs associated with selling hardware:
--Ed Snyder, an analyst with Charter Equity Research, told the New York Times: “They poured all their resources into developing a killer product. But they didn’t have the resources left to go to market.” (link)
--Engadget called Palm "a company that has more talent, history, and bright ideas than it has cash and customers." (link)
--Charlie Wolf of Needham & Company told Bloomberg: "It can't get scale. It doesn't have the resources to market the Palm OS and the Pre in a way that would break through the noise." (link)
--Even Palm CEO Jon Rubinstein blamed the problem on marketing challenges: "Palm webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today....However, driving broad consumer adoption of Palm products is taking longer than we anticipated." (link)
The quotes reflect the tech industry's stereotypical view of hardware businesses: They require huge marketing budgets, making them incredibly high-risk, high-cost investments. That's why you see thousands of software startups in Silicon Valley and only a handful of hardware ones.
I think that's nuts. Hardware companies like Pure Digital (maker of the Flip camera) succeeded with virtually no marketing budget. Why? Because they made appealing products that filled a particular customer need. If you do that, hardware is easy to market virally. I think the lesson from Palm's failure isn't "making hardware is dangerous," it's "lack of focus in a small hardware company is dangerous."
I don't want to turn this post into an anti-Palm diatribe. As I said, I hope they survive, and I have enormous respect for the people who work there. But in the spirit of helping everyone learn from Palm's situation, here are the five lessons I think we should all take away from Palm's struggles:
1. Understand what problem you're solving. I asked this question when the Pre was first announced, and I'll ask it again now: What compelling problem does the Pre solve for what customer? (link) It's easy to answer that for successful devices:
--BlackBerry = great e-mail on the go for mobile professionals
--iPhone = the best entertainment and browsing on the go (later extended to include apps)
--Flip = the easiest way to capture video and share it online
What's the short pitch for Pre? Go check the Palm website. As of April 18, it featured three different positionings right on the front page: "Social networking at its best," "Advanced 3D games," and "Work smarter, stay connected." So it's a business / social networking / gaming tool. For all of those millions of people who want to do serious business, 3D games, and Facebook posts all at once.
This isn't a recent problem. At the time of the Pre announcement, Palm advocates described it as a device for people who want better e-mail than the iPhone and better entertainment than the BlackBerry. The implication was that there's a big center to the smartphone market that's frustrated by the lack of a keyboard on an iPhone and the lack of a music player on BlackBerry. Re-read Jon Rubinstein's quote above: "webOS is recognized as a groundbreaking platform that enables one of the best smartphone experiences available today." The assumption there is that millions of customers are looking to buy a "smartphone experience," as opposed to a tool that solves a particular problem.
If that unsatisfied center existed, Pre would have sold like hotcakes.
2. Take care of your friends. When Elevation Partners took control of Palm, the company wasn't just a famous brand. It also had a fairly large base of loyal customers and developers who had stuck with the Treo through a lot of angst and adversity. The new Palm did very little to keep those people loyal. The developers weren't given any way to bridge their existing applications to the new OS. Faced with starting over on webOS or starting over on the much larger iPhone base, guess what they chose. And Palm, which once prided itself on simplicity, made the Treo to Pre migration process into the sort of marathon experience that we used to tease Microsoft about. Here are some of the instructions from Palm's own website (link):
Decide where you want to move your Calendar/Contacts
The Data Transfer Assistant moves your info out of the desktop organizer and onto your phone. From there, your phone sends the data to the web account of your choice.
Your choices: Google, Microsoft Exchange, or Yahoo!.
Need help deciding where your info should go?
Skip this step if you already have an online account where you want to move the info from your old desktop organizer.
Create an account for one of these web services:
1. Go to Google.com: Create a Google account and set up a new account.
2. If you've never used Google Calendar, you'll need to sign in at least one time before proceeding. Go to google.com/calendar, and follow the login & activation steps until you see your calendar.
Microsoft Exchange for corporate users
Ask your IT Helpdesk for these four pieces of information.
* Incoming mail server name
* Domain name (if it's different from your incoming mail server name)
* Exchange username
* Exchange password
Yahoo! Calendar & Contacts
Contacts are transferred from Yahoo.com to the phone, but not from phone to Yahoo!
1. Go to Yahoo.com: Sign up for Yahoo! and create a new account.
Or back up your info to your online Palm profile
Ready to go - you already created an account when you set up your phone.
Set up the account on your phone
After creating an online account, add it to your phone. This ensures that your info moves correctly to the account.
1. On your phone, open Contacts.
2. Open the application menu and tap Preferences & Accounts.
3. Tap Add An Account and select the account you created above.
4. Enter the username and password for that account.
Sync your old device one last time
Skip this step if you do not have a previous Palm device.
To make sure you have the most up-to-date version of your info in Palm Desktop or standalone Outlook, synchronize your previous Palm device and your computer one last time.
Export your info using the Data Transfer Assistant
For fastest results, turn on Wi-Fi (if available) and plug in the charger before proceeding.
Download the tool: Data_Transfer_Assistant_1e.exe
After the download is complete, double-click Data_Transfer_Assistant_1e.exe in the location on your computer where you downloaded it.
Follow the onscreen instructions.
Note: When you connect the phone to your computer, some applications may launch automatically, moving the Data Transfer Assistant to the background. To return the Data Transfer Assistant to the foreground, click the Data Transfer Assistant icon on your computer's taskbar....
You can find some more discussion here.
This in itself wasn't a disaster. Any company has to set priorities, and Palm just didn't make the links to its legacy customers and developers a priority. But it meant Palm couldn't draw on a pool of friends to help it get sales off to a quick start. That put even more pressure on Pre to be a knockout hit from day one.
3. Move faster and slower. After the Elevation deal, Palm went through a very strange management transition. Jon Rubinstein was installed as Chairman and head of product development, Ed Colligan remained as CEO (so he was Jon's employee and boss at the same time), and Jeff Hawkins was supposed to remain as product guru. Palm said at the time that Jon would be the execution person and Jeff the visionary. "The combination of those two guys is one of the most dynamic... combinations on the planet," Palm said. Yeah, right. The real process was a creeping reorganization in which Rubinstein replaced the old Palm executive team in stages. I think Palm would have been better off with a single quick transition in which the new team was put in place all at once and given time to coalesce.
But if Palm moved too slowly on organizational change, it probably moved too quickly on product shipment. The Pre shipped without a finished development environment, frustrating the developers who were most motivated to create interesting software on it. And it had an OS that hadn't been tuned properly for performance, so even its most enthusiastic users had to apologize for its lack of responsiveness. Although there was a lot of pressure on Palm at the time to ship, in retrospect the company would have been far, far better off if it had waited a few more months and shipped a product that delivered a great user and developer experience.
4. What you do, do well. The old Palm's "zen" design principles said: "Find a problem, find the simplest solution, punt the rest." It was an appliance design philosophy translated into computing. The new Palm tried to boil the ocean. Its ambition to create a smartphone platform superior to iPhone forced it to compete on a very broad range of fronts, everything from OS to SDK to app store to hardware. Inevitably, Palm wasn't able to execute equally well in all areas, and some of the Pre's features were compromised due to lack of resources. Apple can get away with a flawed version one product because it has the financial resources to go back and fix its mistakes. Which brings me to the fifth lesson...
5. You're not Apple. Trying to beat Apple head-on is a rich man's game, the computing equivalent of fighting a land war in Asia. There are effective ways to compete with Apple on a budget, but they all involve avoiding or neutralizing its strengths, and targeting segments or tactics that Apple can't or won't pursue. Instead, Palm attacked head on. I'm picturing that Warner Brothers cartoon where Black Knight Yosemite Sam charges at full speed into the wall of a castle and bounces off flat as a pancake (link).
What it means for the rest of us
You'll notice that I didn't say anything about Palm's bizarre ads featuring a Borg hive queen (here and here). That's because they were a symptom, not a cause. When your product is right, the message will be simple and you won't need creepy ads to stand out. Often you won't need ads at all.
The mistakes highlighted by Palm are common in the tech industry. Here's what I think we should do about them:
--I know there are device companies out there right now where the employees are whispering to each other, "we've committed to shipping on a certain date, but the product won't really be ready." You know who you are. Don't let your company pull a Pre; speak up. If nothing else works, print this post and send it to your boss. The Board of Directors might fire you if you delay the launch, but they definitely will fire you if the product fails.
--I frequently talk with companies that are creating bundles of technologies rather than coherent solutions to problems (anybody want to buy a Verizon Droid? link). Ask yourself, who is my customer, and am I solving a problem that they care about deeply?
--I know investors who say, "I'll never touch hardware, it's too risky." Understand that you're missing opportunities where you could invest with a higher return, because valuations aren't being bid up by competing investors. The fault, dear investor, is not in our product category, but in our execution.
That's my take. What do you think? Where did Palm go wrong (if at all), and what do you think the lessons are for other companies?
Saturday, April 3, 2010
Tyler Perry's Why Did I Get Married Too
Lionsgate and Tyler Perry's - 'Why Did I Get Married Too' was really a film worth seeing. It was great catching up with the four couples (from the previous film entitled 'Why Did I Get Married?' 2007)
and finding out what's going on behind each of their four walls (literally, psychologically and emotionally).
Terry and Diane (Tyler Perry and Sharon Leal) are my favorite couple. Terry is very intuitive and Diane is smart, cute and very clever - so she thinks. 
Patricia (Janet Jackson) and Gavin (Malik Yoba) really go at in this film. Sheila and Troy (Jill Scott and Lamman Rucker) truly get tested in the area of trust. Angela and Marcus (Tasha Smith and Michael Jai White) have no trust and are always bringing on the drama - full force! Oh yes, and Cicely Tyson and Louis Gossett Jr. make an appearance and it is soooo timely. It's like one of Stevie Wonder's songs - which is not in Tyler Perry's film, but best describes how I felt about the film - "Love's in Need Of Love Today."
If you are a true believer that everyone has a mate out there and that some of us might even be fortunate to find our soul mates in our life time, then this movie is right on time.
It also makes me wish for a week on the fabulous Bahamas...
I loved the film and I advise everyone to go and see it - then tell me what you thought about the film!
I loved the film and I advise everyone to go and see it - then tell me what you thought about the film!
C
Thursday, April 1, 2010
A dissenting view on the Yahoo - New York Times merger
The reactions to the New York Times - Yahoo merger announcement this morning were predictably brutal. "The best corporate merger since AOL-TimeWarner," TechCrunch wrote. On the radio this morning, one of the commentators talked about "the blind leading the crippled," and joked that they should both merge with General Motors so we could "get all the deadwood together in one place." The impromptu picketing of Yahoo headquarters by angry Flickr users probably didn't help.
I have a different take on the deal, though. After years of failed "new media" ventures based more on hope than synergy, I think this one might actually make business sense. Here's why:
No more paid content fantasies. The Times had been headed down the road toward making its content paid-only for anyone reading more than a few articles a month. In my opinion, this was a huge roll of the dice that could have destroyed the company's long-term prospects. The Times online edition is the most popular newspaper site in the US, and has been very gradually closing the gap with CNN, the US online news leader. Moving to a paid model would have cut the Times audience very substantially, leaving some other news operation to seize the number one position. As we know from other areas of the web, there are very strong network effects online. Once the Times surrendered the online traffic lead, I think its role as the newspaper of record in the US would have gradually been lost.
No more Yahoo search fantasies. Yahoo has had a terrible time deciding what sort of company it wants to be. For a long time it was supposed to be a "new media" company, which apparently meant it had the business practices of a film studio without the cool movie premieres. Many people in Silicon Valley still think of Yahoo as the failed Google wannabe, which is kind of like criticizing Sweden for failing to be Germany.
Unfortunately, Yahoo has been feeding that comparison lately with radio ads touting the benefits of Yahoo search. One was a scenario about a woman who was able to use search to find where a movie was playing, but not the actual showing times of the movies. Let's do a reality check, gang. Have you ever looked up a movie online? Do you know how hard it is to confirm where a movie is playing without also finding the showtimes? The effect of the ad is to position Yahoo as the search engine for stupid people.
And besides, it put the focus back on search, where Yahoo is destined to be an also-ran forever. The company shouldn't drop that business (it generates a lot of cash), but it's not the future engine of Yahoo's growth.
So, what is Yahoo's future? I think its biggest strength, what we used to call in business school its "core competence," is its ability to pair brand ads with content. Yahoo is world class in its ability to work with major brand advertisers to match their online ads with words and pictures that attract the people they want to target. It's not as sexy a business as search advertising (because the revenues and growth rates are not as good), but it's a real business and Yahoo does it better than anyone else I know of.
Yahoo's challenge, in my opinion, has been that not all of its content is top quality, so some of its sites are not as attractive to advertisers as they should be. In places where Yahoo has great content, such as Yahoo Finance, the engine seems to work very nicely. In other areas, Yahoo's content is very me-too, and so are the results.
The synergy. The New York Times' challenge is that it has great content but can't make the online audience large enough to pay for its huge editorial staff (the Times currently reaches 1.25 percent of global Internet users each day, according to Alexa). Yahoo's challenge is that it has huge reach (27% daily reach of global Internet users) but inconsistent quality. Pair the Times' outstanding content with Yahoo's reach and advertising expertise, and maybe you could make the world's most powerful online publisher.
Anyway, that's what the merger's going to test.
Next steps: Clear the decks. To make the merger work, both companies are going to need to focus on what they do best, which means paring away the other businesses they've added in the past as diversification experiments. In the NYT's case, that means letting go of a lot of other media properties the company has picked up over the years. There's going to be just one national news leader, not three, and it doesn't make sense to keep on paying full editorial staffs at several different places, many of them duplicating each others' work.
And at Yahoo, that means stepping back from being an internet conglomerate. Search is important as an on-ramp to quickly get eyeballs to the content of the new Yahoo, but it's not the long-term goal in itself. A friend at Yahoo told me the other day that a third of the company would probably quit if Yahoo decided to focus on publishing. My thought: that might be better than gradually bleeding the best and the brightest throughout the company as they lose faith in Yahoo's overall direction.
A human resources executive at Apple once listened to employees complaining about a reorganization, and then said, "when the caravan starts moving, the dogs all bark." It was a heartless comment, but he had a point. In that spirit, the picketing by Flickr users is probably a sign of healthy change.
Or it would be if any of this post were true. But it's April 1, and I'm indulging in a little bit of tech industry fantasy. In this case, though, I'd call it a dream.
Memories of past April Firsts:
The tech industry bailout (link)
iPhones worn as body piercings (link)
Spitr: Twitter meets telepathy (link)
Sprint and Google, a match made in Kansas (link)
I have a different take on the deal, though. After years of failed "new media" ventures based more on hope than synergy, I think this one might actually make business sense. Here's why:
No more paid content fantasies. The Times had been headed down the road toward making its content paid-only for anyone reading more than a few articles a month. In my opinion, this was a huge roll of the dice that could have destroyed the company's long-term prospects. The Times online edition is the most popular newspaper site in the US, and has been very gradually closing the gap with CNN, the US online news leader. Moving to a paid model would have cut the Times audience very substantially, leaving some other news operation to seize the number one position. As we know from other areas of the web, there are very strong network effects online. Once the Times surrendered the online traffic lead, I think its role as the newspaper of record in the US would have gradually been lost.
No more Yahoo search fantasies. Yahoo has had a terrible time deciding what sort of company it wants to be. For a long time it was supposed to be a "new media" company, which apparently meant it had the business practices of a film studio without the cool movie premieres. Many people in Silicon Valley still think of Yahoo as the failed Google wannabe, which is kind of like criticizing Sweden for failing to be Germany.
Unfortunately, Yahoo has been feeding that comparison lately with radio ads touting the benefits of Yahoo search. One was a scenario about a woman who was able to use search to find where a movie was playing, but not the actual showing times of the movies. Let's do a reality check, gang. Have you ever looked up a movie online? Do you know how hard it is to confirm where a movie is playing without also finding the showtimes? The effect of the ad is to position Yahoo as the search engine for stupid people.
And besides, it put the focus back on search, where Yahoo is destined to be an also-ran forever. The company shouldn't drop that business (it generates a lot of cash), but it's not the future engine of Yahoo's growth.
So, what is Yahoo's future? I think its biggest strength, what we used to call in business school its "core competence," is its ability to pair brand ads with content. Yahoo is world class in its ability to work with major brand advertisers to match their online ads with words and pictures that attract the people they want to target. It's not as sexy a business as search advertising (because the revenues and growth rates are not as good), but it's a real business and Yahoo does it better than anyone else I know of.
Yahoo's challenge, in my opinion, has been that not all of its content is top quality, so some of its sites are not as attractive to advertisers as they should be. In places where Yahoo has great content, such as Yahoo Finance, the engine seems to work very nicely. In other areas, Yahoo's content is very me-too, and so are the results.
The synergy. The New York Times' challenge is that it has great content but can't make the online audience large enough to pay for its huge editorial staff (the Times currently reaches 1.25 percent of global Internet users each day, according to Alexa). Yahoo's challenge is that it has huge reach (27% daily reach of global Internet users) but inconsistent quality. Pair the Times' outstanding content with Yahoo's reach and advertising expertise, and maybe you could make the world's most powerful online publisher.
Anyway, that's what the merger's going to test.
Next steps: Clear the decks. To make the merger work, both companies are going to need to focus on what they do best, which means paring away the other businesses they've added in the past as diversification experiments. In the NYT's case, that means letting go of a lot of other media properties the company has picked up over the years. There's going to be just one national news leader, not three, and it doesn't make sense to keep on paying full editorial staffs at several different places, many of them duplicating each others' work.
And at Yahoo, that means stepping back from being an internet conglomerate. Search is important as an on-ramp to quickly get eyeballs to the content of the new Yahoo, but it's not the long-term goal in itself. A friend at Yahoo told me the other day that a third of the company would probably quit if Yahoo decided to focus on publishing. My thought: that might be better than gradually bleeding the best and the brightest throughout the company as they lose faith in Yahoo's overall direction.
A human resources executive at Apple once listened to employees complaining about a reorganization, and then said, "when the caravan starts moving, the dogs all bark." It was a heartless comment, but he had a point. In that spirit, the picketing by Flickr users is probably a sign of healthy change.
Or it would be if any of this post were true. But it's April 1, and I'm indulging in a little bit of tech industry fantasy. In this case, though, I'd call it a dream.
Memories of past April Firsts:
The tech industry bailout (link)
iPhones worn as body piercings (link)
Spitr: Twitter meets telepathy (link)
Sprint and Google, a match made in Kansas (link)
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