Monday, September 15, 2008

Big Portals Open Up

While financial dominoes were falling over the weekend, two of the big portals announced major changes in the way they offer services to consumers, advertisers and developers. Neither is totally new news, but events over the weekend represented major steps in making the new strategies reality.

As early as October 2007, Chief Yahoo Jerry Yang made a post on the corporate blog that gave the broad objectives of his strategic review. He said Yahoo! intended to:

1. Become the starting point for the most consumers

2. Become the must-buy for advertisers

3. Deliver open, industry-leading platforms that attract the most publishers and developers

In April they announced Y!Open as the implementation of these strategic goals. According to PC Magazine, “YOS is a bold initiative to open all Yahoo sites, online services and Web applications to outside developers, and give users a "social profile" dashboard to unify and manage their Yahoo services.” This past weekend the project became very public when Yahoo invited 300 developers to Open Hack Day. According to Yahoo a “hack” is a little program, easily put together, that does something useful and fun. For example, one developer has developed an app that allows users to combine Flickr photos with the My Trips section of the Yahoo! Travel page. Since I had to look to find what My Trips actually was, it immediately occurs to me that this can be promotional for Yahoo’s lesser-known services. For more complex apps developers can use APIs like Yahoo’s BOSS, which lets sites construct their own specialized search services.

This graphic representation of the Y!Open concept comes from a video made at last week’s conference. Yahoo CTO Ari Balogh would like for you to think of the new Yahoo as an open, social, and very sticky platform. It looks quite comprehensive, including search, dynamic pages, mail, mobile and other. You can access the video from this page.

AOL’s strategy seems less comprehensive than Yahoo’s. They are allowing users to check other mail from their AOL page, and they explain how it works on their corporate blog. This is a step for the once-walled garden, but it’s not a major change in strategic direction. AOL does have APIs for developers. Some, like the one for MapQuest, are widely used, but they seem to be individual services, not a major opening of the AOL platform.

Both these strategic moves, especially coming so close together, are indicative of evolutionary growth in the Internet, all in the direction of Web 2.0. On one hand, it clearly indicates the continuing desire of the large portals to be the oft-visited gateways to the Internet for their users at the same time they offer an array of increasingly-social services that keep users on their own sites longer.

On the other hand, it offers huge opportunities to smaller sites and less technology-focused businesses to take advantage of leading-edge user services. Using the APIs of the tech powerhouses, they can develop their customized services at relatively low cost and have them hosted on the powerhouse site.

Google, Amazon and eBay are all major originators of this open platform strategy, making it a key part of their business model. Yahoo is making what appears to be a bold move to join them; AOL is moving although perhaps less boldly.

This all suggests a new type of business consolidation. It’s one that is not represented by mergers and acquisitions, but by shared services. Interesting and worth watching!

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