Yahoo Fails Again and Why?

I still clearly remember that Yahoo was the very first URL that I browsed in my Internet Explorer 1.0 (or beta release?) browser way back in 1995. I had just joined my first job and was all excited about the Internet access that was provided to us after 5PM every day through a single dedicated machine in the whole company.

yahoo-failsI always thought Yahoo is an amazing company that produced huge volume of organized content bundled with strong search capability as early as in 1994. Their portal was a highly usable and browsable one despite featuring traditional looks. Despite all those services and acquisitions its vital numbers have been declining for the past three years or so an let us examine why.

10 Things that failed Yahoo

If I look back, the following are some of the reasons why Yahoo failed to keep its overall performance as a web company up to the mark.

Slow search innovation

I remember a time when Yahoo was delivering highly relevant content and boasted quality over quantity. However, the speed of search and the Google kind of simplicity is what it missed since the search feature was a part of its portal. On top of this, it failed to index the social media content and blog networks at the right time. Yahoo still has a lot of relevancy in search results. It doesn’t fall for cheap SEO optimized content but a few other things and general mindset of the modern search user is not favoring it at the moment. Perhaps, search capability for the modern user is all about an input box and the belief that he or she’s feeling lucky.

High maintenance cost portal

Well, when you offer too many web services through a single window, the maintenance and upkeep of those terrabytes of cotent need a lot of human resource and hardware investment. You cannot afford to cut those expenses even in economic melt down situations. If I look back, I would think that though Yahoo survived the 2000 dot com fall, it has not quite recovered from the 2008 recession.

Advertising network

Yahoo, in fact, had the best opportunity to do search engine marketing and related innovation. It could have even bundled on services and survived on that front. However, Yahoo was always seen as a ‘US brand’ who focussed more on US advertising opportunities and US publishers that it failed to tap into the global traffic. This is where Google marched ahead of its competitors like Yahoo and Microsoft.

Acquisitions that didn’t work

Yahoo started its acquisition spree around a lot of WEB 2.0 services like social media, book marking, photo sharing and SEM services such as keyword research at the right points of time. However, in terms of consolidating these services, I believe, they have failed and even worse – they had to discontinue many of them. Not sure if acquire and kill was part of the strategy but it always cost them a lot of money.

Spammy mail service

Mail spam was acceptable for the Internet user of the 90s who badly wanted something to reach his email box. However, the era of spam free mailbox soon started and Yahoo was then pushed behind. There’s no such thing as a totally spam free email box but I thought Yahoo should have done a better job with their spam management. I would believe that their mail service marketshare has been declining due to this very reason.

High cost services

Some of the services offered by Yahoo – for example, small business services that offers web hosting – is priced pretty high even when hosting services by competitors have been slashing their prices drastically. I do not understand yahoo’s pricing strategy v/s service quality at times.

Non-inclusive, non-global attitude

Most of the Yahoo service was (and is) meant for the North American crowd and although it caught up with some amount of globalization, it still doesn’t have the image of a truly global company. I talked about the advertising product and the case is/was pretty much the same with other services as well. For me, Yahoo and AOL were of the same kind in that respect.

Yahoo customer service

I do not have much experience with Yahoo’s customer service for their paid services but for the unpaid services the customer service is almost non-existing. For example, I have been a level 3 Yahoo Answers user when I got banned for unexplained reasons. To date, since the ban in 2009, I haven’t got any reply from their customer service. The case was the same when I reported mail related issues earlier. This doesn’t mean that Google or Microsoft offers the best

Not starting a SocNet

Imagine the situation of having millions of email addresses and profile details with you and still not being able to connect and get the best out it. That’s the situation Yahoo has been in who probably had the best opportunity to start a Social Network or something of that sort in the mid-2000s. Instead, it seems, they were only selling email addresses to

Not selling to Microsoft

Well, probably the best ever opportunity came in 2008 when Yahoo had a chance to sell itself to Microsoft. If you look back, since then they have been on a partnership model for certain services but that hasn’t quite benefited Yahoo. The combined search marketshare has been increasing a little bit but it is not showing in the bottomline.


Well, this is just my view points. Since it’s a web company that I like a lot, I thought of posting this off topic writeup. To be frank, I would have liked to write more about their search engine. Anyhow, I hope to see Yahoo bouncing back with some extra ordinary innovation and leadership.

Good luck Yahoo!


  1. Interesting take Ajith. I think the acquisitions and lousy innovation ideas killed them. I think they believed they would always be the big dog; their commercials were pretty neat back in the early part of the decade. Then they got surpassed and outsmarted and never recovered.

    When you think about them & other services you find that the others each had at least one strong innovator at the top; Yahoo lacked that. I’m still not sure selling to Microsoft would have been a great idea, though it might have saved them from falling as far as they have.

  2. Ajith,
    Good analysis and thanks for sharing.

    There are couple of issues got embedded in this. First, addressing right direction for future, while we illuminate in industry.
    Second, Marketing strategy. Industry mergers and partnership becomes so popular currently. So, identifying right marketing tie-up is crucial.
    Third, Passion always should override $. Not reverse way.
    Thanks – Manickam

  3. Tipsum :

    I still remember how Yahoo Messenger used to be the only thing I would use all day on my pentium2 machine. Now the thing is so unusable. Agree with you, Yahoo lost out on not innovating.

  4. ITsiti :

    Yes..i agreed that

    1. Yahoo shouldn’t put everything on their homepage..hard for people to search for information..

    2. Optimize their search engine

    3. Globalize their advertisement program

  5. Prem :

    The main reason for yahoo failure is “social networks”. Yahoo concentrated only in messanger and mails… that’s all

  6. Sam :

    Yahoo is a complete failure, Google picked up its opportunities and has progressed a lot and pushed Yahoo back, as of now most of yahoo’s services suck including mail and messenger.

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