Despite the fallout from the sudden firing of CEO Carol Bartz this week, Yahoo is not a company in crisis. At least in terms of the numbers. The firm doubled profits last year to US$1.2 billion and delivers around 45,000 Internet pages every five minutes, making it the fourth most-visited website on the web, boasting over 600 million monthly users. 

So why has it just ditched its latest CEO after barely two years in the job? While Bartz’s “robust” management style didn’t appear to win her many supporters among staff, her departure has more to do with a perceived inability to keep pace with fierce rivals such as Google and Facebook.

In both cases, these rivals are diverting eyeballs away from Yahoo’s media properties and the fear is that advertisers will soon follow suit. In the case of Google, Yahoo is losing out in search (Yahoo’s ill-fated search alliance with Microsoft was probably Bartz’s biggest misstep); while Facebook’s success has served to highlight just how poorly Yahoo is doing in the social networking space, despite a huge active user base.

But the key area where Yahoo comes up short is in mobile. While Google has Android and Facebook boasts the world’s most downloaded mobile app, Yahoo has never really had a mobile strategy beyond simply repackaging content for the smaller screen.

Indeed, efforts at a deeper integration of its services with mobile have been failures. Take, for example, last year’s alliance with Nokia to integrate its IM and email services with the Finnish vendor’s Ovi services portfolio. While that deal made sense on paper – enabling Yahoo to catch up with Google in areas such as mapping and navigation, for example – Nokia’s subsequent move to migrate to Microsoft’s Windows Phone platform effectively saw Nokia dump most of Ovi as part of the transition. Yahoo had clearly backed the wrong horse. 

A more recent strategy for Yahoo has been to lean on its vast network of publishers, writers and other content providers in order to deliver highly-personalised content to users via smartphones and tablets. To this end, Yahoo launched a new product called ‘Livestand’ at Mobile World Congress this year, a so-called ‘digital newsstand’ that aggregates content specific to the user. “Content and context is the sweet spot for Yahoo,” said Bartz during her Barcelona keynote. It’s too early to say if this effort to become a conduit for mobile content has legs – and Bartz’s exit could mean it’s back to the drawing board once again.

What Yahoo’s mobile strategy will be post-Bartz remains to be seen, but it’s hard to see how a modern Internet services company will thrive without mobile services being at the heart of everything it does. When Google’s Eric Schmidt spoke at Barcelona in 2010 he talked of a new philosophy at the firm summed up as “mobile first” – a commitment that all future products should be engineered from the ground up with the mobile experience in mind. Google’s recent Google+ social network – launched simultaneously as a website and an app – is proof of this concept in action.

If Yahoo, one of the pioneering Internet players, is serious about reinventing itself in the modern age then the formation of its own “mobile first” strategy should surely be its highest priority.     

Matt Ablott

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members