Other Analysts Say Yahoo Should Not Stray

By Clint Boulton  |  Posted 2008-11-18 Print this article Print

Noting the lack of cash or data center infrastructure to serve SAAS or PAAS, Reeves said Yahoo should partner with a company that could provide such infrastructure, such as Verizon, BT or AT&T.

eWEEK ran these notions by Gartner's David Mitchell Smith, who acknowledged that while cloud computing provisions from Yahoo are not out of the realm of possibility, these models don't reflect Yahoo's core competencies.

Smith dismissed the Salesforce.com comparison as something that would be "shocking" to him because Yahoo lacks the expertise to provide something similar to Salesforce.com's offering. The closest Yahoo could come in this enterprise-oriented cloud would be something like the Google App Engine, where Yahoo would open up its data center for hosted application development.

Again, however, does Yahoo possess the necessary infrastructure and even the engineering talent to enable such a PAAS play? Smith said he doubts this very much.

Finally, Yahoo needs money, and Smith argued that SAAS and PAAS are not necessarily lucrative. "All of [these PAAS providers] are not making much money for anyone, or it's not clear they're making much money for anyone. Amazon doesn't share whether they're making money."

However, the notion of Yahoo straying from its consumer-oriented Web services to help programmers build or support applications for businesses is anathema to Forrester Research analyst David Card, who has been following Yahoo closely.     

Card noted that while Yahoo has already opened up a slew of APIs to let programmers build out search and communications, the idea that Yahoo would rent out its server farm for hosting "doesn't feel to me that that's what Yahoo is about." He added:

I think Yahoo needs to focus rather than spread itself a little bit thinner. It feels to me like their core competencies would be their core audience, those content services they have already, and their ad sales force and position in advertising. It feels to me they should exploit those assets a little bit better rather than sell Web services like hosting ... They have an entirely different customer set.  

There is another elephant in the room when it comes to this topic: Microsoft. Despite CEO Steve Ballmer's public refusal to bite on the question of whether Microsoft will renew acquisition talks with Yahoo, Reeves, Smith and Card all acknowledged the possibility of Microsoft coming back to the table to play another hand.

Reeves said he thinks Yahoo could support Microsoft's Azure Services Platform in its data center. Smith suggested that Microsoft's and Yahoo's mutual advertising focus could be the tie that binds them together to tackle Google. Card would have preferred Yahoo to have been sold to Microsoft months ago, noting that if Microsoft is serious about search, it needs user eyeballs, which means it needs to buy a big property like Yahoo or AOL.

Microsoft Watch's Joe Wilcox says Yahoo must do a deal with Microsoft to avoid dissolution.

What do you think? Does Yahoo have the intellectual property and talent to remain on its present YOS course, or does it need to grab an infrastructure partner and go deeper into the cloud for businesses? What about choice C, joining Microsoft?


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