CEO Bartz's exit clouds Yahoo! India prospects

Almost two years ago, when Carol Bartz visited India as the new chief of Yahoo!, she had appealed for a renewed belief in the company's prospects, both globally, as well as in India.

She had also taken steps like appointing Arun Tadanki as managing director of Yahoo! India in May 2009. The company had been without a leader in India for almost two years after George Zacharias' exit.

The media and analysts, however, remained sceptical on Bartz's ability to revive the company's former glory.

Now, with her departure, the company's future is once again being questioned. "Yahoo! was earlier directionless. Now it's headless," says Mahesh Murthy, founder & chief executive, Pinstorm. He says while the company "did well to overtake Rediff.com in India, its revenues compare poorly with that of Google's".

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Industry estimates peg Google's India revenues at around Rs 1,000 crore (Rs 10 billion) annually, while Yahoo! India's revenues are yet to cross the Rs 100-crore (Rs 1 billion) mark. Rediff's India turnover stands at around Rs 80 crore (Rs 800 million).

"While Yahoo! converted itself from a search engine to a general portal, it has slipped from its numero uno position in all segments," says Murthy.

Ajit Balakrishnan, founder and chief executive, Rediff.com, said, "Yahoo! is a great company I am sorry to see it struggle."

This was not the case about 12 years ago, when the world wide web had made its presence felt. Yahoo! had then upstaged brands like Altavista, Excite and Northern Light and the default search engine.

And, when Yahoo! co-founder Jerry Yang launched the company in India, he had invited late Bollywood star Shammi Kapoor (whose 'Yahoooo' shout in the film Junglee was quite a rage) to launch the site.

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The game-plan worked well and the brand recall of Yahoo! was high. That was till Internet search giant, Google, turned the tables on Yahoo, which unwittingly allowed it to power its search engine. The result: Google is today the default search brand, both globally as well as in India.

Globally, too, Google tried to acquire Yahoo!. Later, Microsoft bid for it. But both the deals failed, and the Yahoo! brand name received a drubbing, both in terms of revenue and image.

Yahoo! now has a tie-up with Microsoft's search engine, Bing. In a bid to recover lost ground and capture marketshare, Yahoo! initiated a $100-million global plan under Bartz. India was an integral part of the Ogilvy campaign which read: 'The internet is under a new management--YOURS. It's Y!ou'.

Bartz, however, was unable to regain lost ground. Globally, Google sites became the first web property to surpass one billion unique visitors, according to ComScore data.

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Microsoft sites comprised the second-largest global web property, reaching more than 905 million visitors, followed by Facebook.com with 713.6 million visitors. Yahoo! sites accounted for around 625 million visitors.

Hareesh Tibrewala, joint chief executive of digital agency Social Wavelength, says, "Generally, top level changes in large organisations are tricky, especially ones that are struggling with changes at other levels. So, we will have to wait and see."

Allen Weiner, research VP, Gartner, says, "The big picture shows the Microsoft-Yahoo search alliance has not gone to either party's satisfaction and that Yahoo has lost a number of key executives." The conundrum for Yahoo! in recent years, according to Weiner, has been its inability to develop an identity and sell that to employees, advertisers, partners and consumers.

Chris George, chief executive, EBS Worldwide, feels in India, the market is shifting orbits in the digital space.

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"The 'portal' business is dated and, in many ways, has become fragmented into social, search, news, entertainment mediums. I am not sure if there will be any radical change for their (Yahoo!) India strategy, unless that flows from what Yahoo! chooses to do at the main business level. Of course, if they are serious about India, they could break from the pack and probably buy a local player in any of the mediums."

He adds, "Look at any category and you will see consumers are going to specialised gateways for specialised needs. Nobody wants a 'mall' anymore, and Yahoo! was that 'mall'. At least, portals like Rediff.com are built around a strong foundation of journalism and news. It's hard to think of what Yahoo! stands for anymore."

When contacted, a Yahoo India spokesperson said: "It will be impossible for us to comment anything further (beyond the announcement of Bartz's resignation) as of now."

Though Google is the leader in the Indian online segment, Yahoo! is not a spent force. According to ComScore data, Yahoo! records 34.8 million unique users per month in India and its network reaches 81.4 per cent of the Indian internet audience--pegged at 100 million in 2011.

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It has the largest research and development centre for the company outside the US, and has undertaken end-to-end development of over 20 products, including development of key products like Yahoo! Mail and Messenger.

Yahoo! offers some great services--messaging used by hundreds of millions of users worldwide; a sports brand that stands apart from other web properties and strong content plays in news and finance, notes Weiner, adding the company was yet to find a leader "who has the vision to frame those pieces into cogent opportunity that would lead a transformation resulting in a 21st century media-technology power".

From an India standpoint, it would be critical for Yahoo! to ensure the increased focus initiated on the region over the last few years should not fizzle out, and there must be continuity in the initiatives that were launched during the period, according to Nishchal Khorana, head (consulting, ICT practice,) Frost & Sullivan, South Asia & West Asia.

He adds, "A well drawn-out strategy, keeping the mega trends in mind, rather than a tactical approach, would be pivotal for Yahoo! to gain some ground again."