Yahoo Archive

Yahoo’s first Mobile Developer Conference

Impressions from Yahoo’s first Mobile Developer Conference By Fred Welterlin and Grant Damron

Yahoo held their first Mobile Developer Conference in San Francisco last week. Overall we are most impressed and excited that Yahoo appears to be getting back to focusing on innovation (not content curation), as shown from some of the product feature launches. The day began with Marisa Meyer and Simon Khalaf clearly pinning Yahoo’s future as a “mobile first” oriented company. Note that in the context of Yahoo’s strategy, “mobile first” really means “apps first.” Khalaf in particular illustrated the current app usage revolution by cross examining analytics that suggest a huge exponential growth of app usage well into the future. Interestingly, while a handful of social apps (Facebook, etc) represent where consumers spend the majority of their time, Yahoo asserts that the largest growth areas (the long tail) will be elsewhere- specifically, shopping applications. Yahoo wants to position itself as a leader by providing the technologies that allow start-ups and existing businesses to grow mobile app based commerce and perhaps even leverage some of Yahoo’s content offerings.

Central to the “app first” strategy is Flurry (acquired by Yahoo this year), the premier mobile analytics tool. The rapid integration of the firm into Yahoo’s larger ecosystem has made it possible for a collection of new (and “free”) products to be developed and announced at the conference, named the Yahoo Mobile App Development Suite (featuring 6 tools that mostly support analytics and monetization). Of the new offerings, 2 analytics oriented tools caught our eyes:

  • “Explore” allows users to run custom queries on data in real time, generating high quality graphs within seconds. Think along the lines of Tableau, but free. A quick overview of the service’s architecture presented in the afternoon implied some fascinating innovations and, not surprisingly, that it is running Hadoop under the hood.

  • “Pulse” has a little ways to go- but has potential. It allow devs to send analytics data from the app to other services (reducing overhead - most noticeable in terms of network and battery usage). Only one service is currently integrated, limiting its immediate utility. It will be interesting to see what other analytics services get on board, down the road.

As for monetization, Yahoo has been a major player in targeted advertising for some time now, so it’s no surprise that their tools are designed to funnel data through their ad platform as much as possible (this is what makes it possible for Flurry to be free!). While not exactly new, the most significant ad-specific product unveiled was the Native Ads Service. In an attempt to move beyond the ecosystem of boring ad banners, the service provides applications with all the assets for a quality ad (copy, image, etc) while allowing the apps themselves to handle placement and presentation. This encourages more consistent integration with the host app’s content. Yahoo presented numbers that support an increase in conversion rates, at least within Yahoo’s own apps.

Our Take Away Clearly, Yahoo is looking to empower native app start-ups with “free” tools that provide them with measurement so that product refinement cycles can occur quickly, based on direct feedback. Coupled with seamless integration of advertising (for example, we noted beautifully integrated BrightRoll video ads within some app demos), and the potential to leverage Yahoo’s enormous reach with users and content (news, sports, etc), business developers for mobile applications have a nice set of tools to help them find an edge in the increasingly crowded yet still “wide open” mobile ecosystem. Show me the money!

New social media offering

Digitage Web 2.0Image by ocean.flynn via Flickr

We just announced a new offering with our social-media partner Pluck and their product code-named AdLife. AdLife will inject social media features like customer comments and user-generated content into digital advertisements such as banner ads or micro sites - in effect, turning mainstream ads into social media opportunities distributed across the digital world.

From a technology community perspective we have worked with Pluck on several clients to bring social media features to client’s websites. Plucks services are available through software as a service which enables us to drive faster solutions for our clients. The are some key elements such as dealing with a AJAX/Flash/Silverlight integration and still enabling SEO. Unfortunately, search engines are not able to deal well with rich internet applications yet, but we have some ideas on how to deal with this.

That being said, I think there’s a couple of critical element to why we have to make our sites social.

  1. We are social beings, our sites should follow. Communities will help us make our sites better, by adding the right metadata through comments or confirming where we get it right or telling us where we get it wrong - wikipedia anyone:).

  2. Without bringing social technologies to our client’s sites, the sites we build won’t be found. Organic search engines depend on social to surface pages. Remember google bombing? That was enabled through blogging and trackbackids, a key aspect of social. If your site/page isn’t enabled socially, it won’t rank in google, live, and yahoo.

  3. Outside of organic search people read things on the web, so they can send them to their social graph. Again, we mush make it easy for people to connect with their social graph, so people can passively or actively tell their community about the content.

At Avenue A | Razorfish, we’re one of the largest buyers of online media in the world and we’re partnering with Pluck, a social media technology vendor serving 2.5 billion impressions a month to bring this to life. For more information read the press release or read David Deal’s blog.

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News Corp., AOL Pursue Yahoo Deals

Yahoo Inc. and Time Warner Inc.’s AOL are closing in on a deal to combine their Internet operations. But Microsoft is recrafting its assault plan by talking with Rupert Murdoch’s News Corp., publisher of The Wall Street Journal, about mounting a joint bid for Yahoo, people familiar with the matter said. Microsoft and News Corp. have yet to reach an agreement on joining forces but one person apprised of the plan described the discussions as serious. Such a deal would combine three of the biggest Internet properties: News Corp.’s MySpace, Microsoft’s MSN and Yahoo.

The AOL-Yahoo deal under consideration would include the repurchase of some Yahoo shares at a price above Microsoft’s offer. Taken together with a possible search advertising pact with Google Inc., the plan could give Yahoo an alternative to a Microsoft takeover – although many analysts and investors believe Microsoft will ultimately win out. At the least, Yahoo’s efforts could give it more leverage to negotiate a higher price from Microsoft.

Microsoft Sends Letter to Yahoo! Board of Directors

Microsoft Corp. (NASDAQ: MSFT) sent the following letter to the Yahoo! Inc. (NASDAQ: YHOO) Board of Directors:

Dear Members of the Board:

It has now been more than two months since we made our proposal to acquire Yahoo! at a 62% premium to its closing price on January 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.

While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorized Yahoo! management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo!’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.

By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects.

Given these developments, we believe now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders, creating a more efficient and competitive company that will provide greater value and service to our customers. If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal.

It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo!’s shareholders and employees. We think it is critically important not to let this window of opportunity pass.

Sincerely, Steven A. Ballmer Chief Executive Office Microsoft Corp.

Yahoo!'s Board of Directors Responds to Latest Microsoft Letter

The Board of Directors of Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today sent the following letter to Steve Ballmer, Chief Executive Officer of Microsoft Corporation.

Dear Steve:

Our Board has reviewed your most recent letter with regard to the unsolicited proposal you made to acquire Yahoo! on January 31, 2008.

Our Board carefully considered your unsolicited proposal, unanimously concluded that it was not in the best interests of Yahoo! and our stockholders, and rejected it publicly on February 11, 2008. Our Board cited Yahoo!’s global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments, as factors in its decision.

At the same time, we have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo!, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.

Since disclosing our Board’s position with respect to your proposal, we have presented our three-year financial and strategic plan to our stockholders, which supports our Board’s determination that your unsolicited proposal substantially undervalues Yahoo!. Those meetings with our stockholders have also provided us an opportunity to hear their views.

We have continued to launch new products and to take actions which leverage our scale, technology, people and platforms as we execute on the strategy we publicly articulated. Today, in fact, we are announcing AMP! from Yahoo!, a new advertising management platform designed to dramatically simplify the process of buying and selling ads online.

Finally, our Board has been actively and expeditiously exploring our strategic alternatives to maximize stockholder value, a process which is ongoing. All of these actions have been driven by our overarching commitment to maximize stockholder value.

Our Board’s view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.

In contrast to your assertions about the effect of general economic conditions on our business, Yahoo!’s business forecasts are consistent with what we outlined in our last earnings call. As you know, we recently reaffirmed our Q1 and full year guidance, which is a testament to our ability to perform in line with our expectations despite the current economic environment. In addition, our three-year financial and strategic plan which we have made public demonstrates significant potential upside not previously communicated to the financial markets. This plan has received positive feedback from our stockholders, further strengthening the view that Yahoo! is worth well more as a standalone company than the value offered in your proposal, and would be even more valuable to Microsoft. Your own statements have made clear the strategic importance of Yahoo!’s substantial assets and capabilities to Microsoft.

We regret to say that your letter mischaracterizes the nature of our discussions with you. We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues. Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo! and your suggestions in your letter and the media that you are considering lowering the value of your proposal. Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit.

As to antitrust, we have discussed with you our concerns. Any transaction between us would result in a thorough regulatory review in multiple jurisdictions. As a follow up to a recent meeting among our respective legal advisors we had on this topic, and at your request, we provided to you on March 28 a list of additional information we would need to further our understanding of the regulatory issues associated with any transaction. To date, you have still not provided any of the requested information.

We consider your threat to commence an unsolicited offer and proxy contest to displace our independent Board members to be counterproductive and inconsistent with your stated objective of a friendly transaction. We are confident that our stockholders understand that our independent Board is best positioned to objectively and knowledgeably evaluate our Company’s alternatives and to maximize value.

In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value.

                                             Very truly yours,

           Roy Bostock                          Jerry Yang 
           Chairman of the Board             Chief Executive Officer