One more reason why AOL (AOL) will succeed where Yahoo (YHOO) will fail

By: ispeculatornew
Date posted: 02.08.2011 (5:00 am) | Write a Comment  (3 Comments)

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AOL (AOL) and Yahoo (YHOO) are similar companies in many ways and few of them are positive. Both are original dot com companies that once were leaders in their fields (ISP and search/directory) but tried to live off of the past for too long and are now trying to survive. One could say that they are not anywhere near bankruptcy but for dot com companies to see multiple years of declining revenues gives a clear picture of how bad things are.

That is why when I wrote about them in the past, I would often include them together such as here where IAC Interactive also made the “losers list”. In the past year or so, I have started changing my opinion about AOL and one of its great moves had been the purchase of tech blog leader TechCrunch. It was part of the strategy to focus on technology and advertising instead of trying to produce average content. Then in December when I wrote about what I would do if I were AOL CEO Tim Armstrong for a year, one of the suggested moves was buying the Huffington Post, the biggest blog on the web and what I and many others consider to be the perfect example of what media companies will be like in a few years. I can admit my faults but I got that one right! It seemed like a difficult and costly acquisition to pull off but rather than sit aside like others (Miss Bartz?!), Tim Armstrong pulled the trigger.

This acquisition is more proof that AOL is looking to the future rather than its past. Some have pointed to recent fights between their own techno blogs TechCrunch and Engadget as proof that things are mismanaged but I would actually say the opposite is true. If AOL understands that its strength is technology and advertising, it will not try to interfere in how its content units produce their content. Let them do what they know best.

But what does AOL offer The Huffington Post? It offers the ability for HuffPo to concentrate on content and on the user while AOL can provide the infrastructure both on the technology and ad sales side. Why? Because the HuffingtonPost advertiser is likely also interested in placing ads on a leading technology, or the leading local sites (Patch) as well.

One great example of Yahoo’s demise is its Sports units. Yahoo Sports remains to this day the top sports websites by visitors yet its growth has stalled. Why? Because while competitors like ESPN continue improving the user experience, the technology and the features. I am one of those Yahoo Sports visitors but like Yahoo finance, I have been going less and less often over the years. Why? Because others like ESPN simply offer more. I recently read an interesting interview with ESPN CEO and he said he expected strong competition but more from some guys in a garage somewhere than from Yahoo… That tells it all doesn’t it? While Yahoo continues to offer an average experience to its users, AOL is working to get the best of the best in. A few important segments.

Is it already too late for Yahoo? Of course not and I had personally suggested a few things that Carol Bartz could do but every day it becomes a bit more difficult to turn around this huge ship especially woth AOL already well ahead in the race

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  1. Comment by Open source portfolio — February 8, 2011 @ 3:49 pm

    I actually really like yahoo. Not as a search engine, I got google for that; but as a portal it’s great. I like the news on the main page. I like some of the development they are doing with YQL and YUI. I like their yahoo finance website and the data feed that they provide for free. I use it extensively on my website public portfolio.

    What does AOL offer? Why are they even still around?

  2. Comment by IS — February 12, 2011 @ 11:18 am

    @Open source portfolio – So you mean for finding news and finding things on the web? Then yes, Yahoo is still relevant, but that is only a part of whee their revenues come from. The question is more about the rest of their content, do you use Yahoo Games, email, etc?

    As for AOL, they have some solid properties such as Patch, the Huffington Post, TechCrunch, etc….

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