VoIP Blog - Tehrani.com

December 11, 2006

If you haven’t heard, Yahoo! is restructuring. There is something called a peanut butter manifesto that has been circulating for months saying the company is spread too thin. As you may recall, recently Yahoo! was a big proponent of producing and distributing video content. In fact Media chief Lloyd Braun was hired to launch video content as part of Yahoo! services. This turned out to be a futile effort as evidenced by the fact that both COO Dan Rosenweig and Braun are now leaving the company.

 

The question worth asking what does this restructuring do for Yahoo!? The company has proven it is a defacto site for so many people who are looking for just about anything from weather to e-mail to stock quotes. It has become synonymous with the Internet. Is having more eyeballs than any other company now a bad thing? After all many people use Yahoo! News, Yahoo! Mail, etc. Would less traffic be better?

 

The problem for Yahoo! is generating faster revenue growth. Based on Google's success, search is being monetized much more effectively than virtually anything else on the Net. Obviously Google is in the driver seat when it comes to search.

 

Yahoo! and MSN continue to improve their search engines but it seems no one cares as Google continues to gain on both companies. Yahoo! will have to develop the best search engine -- or at least a much better engine -- to compete effectively in this most lucrative area of the ad market.

 

If they fail to do this they are still positioned well as they get more traffic than any other site. The site is viral and sticky. It is however pretty well accepted that Yahoo! needs to do better in the social networking space where MySpace and YouTube play.

 

But Yahoo! is still strong in this area as their financial forums and other community sites have a tremendous amount of user input. For example the company owns Flickr and del.icio.us. In the end the problem for Yahoo! is the current advertiser obsession with search-based advertising.

 

As long as this obsession continues, Yahoo! with an inferior search product is in trouble. The other problem is branding. Google is synonymous with search. Yahoo! is not. Yahoo! with the best search engine in the world could potentially have little impact on Google’s lead. This obviously contrasts with the statement above but Yahoo! really has to have the best search it can to compete going forward.

 

Of course this assumes Google’s search will stay as good and Google doesn’t lose focus. But with all the money coming in from search ads, I think Google knows better than to take their eye off the ball.

 

Another point worth making is the critical mass Google has reached with hundreds of thousands of advertisers online. As more searching is done via Google the ad network grows and there becomes less and less reason for advertisers to use alternate search-based services for advertising. Sure companies do use Yahoo! and MSN but by ignoring Google they lose out on much of the total searches taking place online.

In effect this monopoly position Google enjoys allows them to raise prices as their search terms are auctioned and prices go up as more advertisers jump onto the network. Google also determines how much their partners receive as a split in the advertising buy. As Google is in the driver seat most web publishers cannot negotiate their pricing and are happy to get whatever split Google gives them. In addition Google’s terms stipulate you cannot have a competitive ad serving service on your site

 

So Yahoo! is perfectly positioned as a massive portal of portals but the market at the moment has decided search is more important than run of site advertising. Yahoo needs to find a way to attract a larger advertising community and to do that the common wisdom is they need to get more people using their search service. The problem is currently, most Yahoo users leave Yahoo! to do their searches on Google.

 

If the free market works correctly in the world of ecommerce then Google ads are more efficient than Yahoo! ads which is why the former is growing so quickly. Yahoo! has to hope search ads become less important or their search traffic gains momentum or perhaps the best situation is where Google ads continue to become so expensive that advertisers look to Yahoo! as an alternative.

 

It is obvious Google is in the driver seat and if Yahoo! really wants to boost revenue they need to focus on social networking and search to boost revenue while not abandoning their video initiatives. It remains to be seen how the company will be able to leverage this restructuring into new revenue that's more than peanuts.

December 11, 2006

So far the Voice Peering Forum here in LA has been fun. It has been so good that I was only slightly tempted to leave the conference and go down the street to the Los Angeles Convention Center where the LA Auto Show is breaking down. Perhaps they need someone to drive one of the Ferraris off the show floor and onto a truck I wonder. Did I mention it is literally a 10 minute walk from here? Did I mention how dedicated I am to my profession? Perhaps part of the reason I need to stay in my seat is I am still working on a presentation I need to give in two hours. I go on at 12:30.

 

At the break a few minutes ago I had a chance at the break to speak with James Rafferty the Senior Product Manager at Cantata. He tells me the outlook for 2007 at Cantata is very strong. The gateway business looks especially good. He says there are new areas of growth for his company such as IP to IP transcoding. I have heard the same from a few other companies in the past year.

 

I mentioned the recent fax news from the company and asked him if he had any comments. This is a different division so I was surprised he addressed it. I am happy he did -- as you may recall Brooktrout -- now part of Cantata, invented the fax board and now boasts staggering market share.

 

James tells me that many companies are bringing IP fax into their enterprise along with voice -- kind of like a horse and buggy. He says there is a good fit between their gateways and fax. He'll be speaking today and we are likely to hear him talk about ENUM resolution between phone numbers and e-mail addresses.

December 11, 2006

December 11, 2006

I am here at the Voice Peering Forum in LA. Things seem to be going well. I have met a bunch of old friends and a few new people. I worked on my presentation early this morning as I am still kind of on EST. I am trying a new PowerPoint format devoid of fancy graphics. The goal is to have the audience focus on me and what I am saying, not the screen. Hopefully this will go as well as I like. There will be no bullets, just topics flying across the screen.

 

One of the reasons speakers use bullets on slides is that it reminds them what to say. What I have done is eliminate bullets --  which means I need to be able to roll through the whole presentation without the crutch of reminders.

 

This should be a no brainer f you know your material. The trouble is when you are on a stage sometimes your mouth and brain don’t communicate as effectively as they could. Call it presentation latency and jitter. There needs to be better presentation QoS. ;-)

December 11, 2006

I was just reading the VoIP Lowdown blog where I happened upon an entry discussing how India is losing tax revenue in telecom because of VoIP. They are considering banning it according to the entry. What is surprising, if this story is true -- is how short sighted it would be for India to ban voice over IP as the entire call center industry being offshored to India came about because of VoIP in the first place. One would imagine the benefits of having so many call centers in your country is more important to the economy than telephone revenue. Well if they ban it perhaps call centers will just find homes in other countries and leave India.