SRnext - Safa Rashtchy

There has been countless analysis of the Microsoft bid for Yahoo, many of them very thoughtful and thorough, but none that I have seen has looked at the issue from the viewpoint of the consumer. Hence, having written about the User Revolution, I feel obliged to take up this task.

First, we must accept the fact that Microsoft has failed massively in creating a value proposition for Internet consumers, and hence has failed to gain any share of heart, regardless of how many unique visitors it has. The simple fact remains that Microsoft has very close to zero brand loyalty, or even recognition, with consumers, as an Internet property. To be sure, Hotmail and a few other MSN properties have some followers, but that’s about it. The reason for this is that Microsoft and MSN, despite the efforts of it’s able and skilled leaders and managers, failed to create a value proposition for the consumes. Yahoo, on the other hand, sadly saw the value proposition that it did have for the user erode away, as consumer behavior changed and Yahoo failed to do so. As such, it baffles me why the combination of Yahoo and Microsoft will make a better value proposition for the consumers.

Many pundits have analyzed the cost savings impact of this merger and the value to the advertisers by reaching a higher aggregate base of users. For the consumer, however, there is no reason to cheer. Yahoo, above all, needs a self-examination of what it is doing wrong and why the time spent on its properties have gone down over the last year. A close examination should reveal surprising simple things that Yahoo can do: make the sites follow my three rules: simplicity, common sense, and accuracy. Simplicity means easy navigation, clean interface, and easy selection – features that Yahoo , (and certainly most Microsoft properties) still noticeably lack, even in their most recent products such as the new Yahoo Mail. Common sense is my term for designing the site based on the way average users will naturally navigate and click, not designing them for ads or pageview or for maximum options, but for the most common way to use the web site. Finally, accuracy refers to having reliable, fast, and accurate information on the site, all the time, creating a sense of trust, the way that Google has earned it. Speed is an important part of this which, for lack of a better word, I have lumped into accuracy.

Surprisingly, the content or topic is not that critical an issue. Yes, social networking and of course “communitinament” is hot with users but many areas of Yahoo are in fact communitianment site – they are just not a properly functioning ones and hence fail to gain major acceptance. Yahoo mail and Yahoo messenger, as well as Yahoo news, finance and Yahoo music are potential gold mines but I highly doubt that Microsoft can help them reach their potential.

Combining Yahoo with Microsoft is most likely to compromise the principles of Simplicity, Common Sense, and Accuracy , even further rather than enhance them. Let me explain why. Microsoft can bring in three important assets to Yahoo: money, technical expertise, and freedom from shareholder pressure. I did not include network effect or cross selling as I think they have been vastly over-sold. But even those three assets are not sufficient to solve Yahoo’s problems, let alone help Microsoft gain a major footprint on the web, without a change of culture. As such, my unsolicited recommendation to Jerry and the Yahoo board is: don’t sell to Microsoft, or to anyone else for that matter. Try to fix the problem by infusing a new life and a new culture, into the valuable entity that you have built.