Microsoft offers to buy Yahoo, and the implications for Vietnamese Yahoo clones: Timnhanh, Zing and ChannelVN etc.
Now Microsoft has offered to buy Yahoo at 62% premium over Yahoo’s closing stock price, I guess Vietnamese Yahoo clones should be wide opening their eyes seeing what way to go ahead.
Microsoft is at its best a very 1.0 software company, still earning most of its income from selling operating systems and office suite. Yahoo under Terry Semel has moving, perhaps too quickly, into a Hollywood-style media company rather than a technology innovator. Both are trailing Google in online search advertising, the most lucrative part of the online ad pie. Would this marriage have a happy ending? In my opinion, yes and no.
Yes because by integrating Yahoo into its online business, Microsoft can strengthen its position in online ads, especially display and rich media, which will grow at a CAGR of 18% compared with that of 16% of search ads from now until 2012, per JupiterResearch. Yahoo owns some of the best web properties so far, especially Yahoo Mail, Flickr and Yahoo Answers. This would be the most meaningful outcome of this possible marriage. Of course the newly combined Micro-hoo can still strengthen its online services like Yahoo’s decent Zimbra and Microsoft’s Office Live, but given the importance of Microsoft’s cash cow Office, I guess Zimbra would soon disappear.
No because apart from the only meaningful strategic move above, a combined Microsoft-Yahoo can only do that far. Both Microsoft and Yahoo are in their full bloom midlife identity crisis. Microsoft and Yahoo’s problems are not technology, or strategy, or leadership, or executional problem, but more a branding problem and to a larger extend, a vision problem. At its core, Microsoft positions itself as a software company. Yahoo’s positioning is an online media/content company. A combination of a 1.0 web company and another 1.5 online giant (Yahoo did own a number of web 2.0 property, notably Flickr, Upcomings, Del.ici.ous, Answers etc.) would do nothing to create a strong enough force to overcome Google in search and a number of other web 2.0 representatives, most notably Facebook. Google and Facebook’s positioning is amazing clear and powerful, i.e. organize the world’s information and help people best connect with their friends. Where is the newly combined Microsoft-Yahoo going, and is there something new in their positioning and value proposition, no one knows yet.
It should be noted that in the past two years, a number of Vietnamese Internet startups have deployed their resources to build their own “Vietnamese Yahoo”. Marquee brand names include heavily funded Timnhanh.com (by DFJ VinaCapital), and the recently launched Zing franchise from VinaGame. VC Corp., an ambitious web 2.0 startup with clamorous $ 2 million funding by IDGVV, is also quietly testing its own portal ChannelVN.net. This is not to mention hundreds of small web companies in Vietnam that are busy preparing their own Yahoo clones. The rationale goes like this: many US Internet models can be “translated” into Vietnam, just copy the model, the interface, tweaking a little bit, and you have a version for Vietnamese people that some day will become cash generator (perhaps through an IPO or an acquisition). Also in light of this rationale, the oldest US Internet model like Yahoo, eBay and Amazon should have the highest rate of success. Easy to understand this rationale has spurn out Chodientu, Timnhanh, and the likes.
However, things turn out not to be that easy. There are two reasons. First, Vietnam is not the United States, and Vietnamese consumers’ behaviors and psychology are not the same as those of their US counterparts. Second, Vietnam’s Internet landscape is also moving at a 2.0 speed like other countries, including the United States and the South Korea. That means if Yahoo is the hottest Internet company in the United States in 2000, then 2001 would be the deadline for a Vietnamese Yahoo clone to establish its footprint. A Louis Vuitton signature bag that is a trendsetter in the United States in 2000 would never become a hot item for Vietnamese fashion lovers in 2008. Another example is Cyworld’s Vietnam exploration. How can a hot fashion item in the South Korea in 1999 become a hot item in Vietnam in 2007? Are you so dreaming?
Things would be more interesting to know that web 3.0 are now well seeded in the United States, and only Vietnamese companies that are brave enough to fast-forward the 1.0 and 2.0 models would be better positioned in 2008. One thing about web 3.0 is vertical. Vietnamese Yahoo clones are so horizontal. Worse, their dreaming of an Yahoo acquisition now seems more unpractical. Perhaps instead of cloning web 1.0 and 2.0 stories, they should think of some 3.0 models that are not even going mainstream in the United States. However, discussion about web 3.0 Vietnam should be another long story, and might be a little bit early now.