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Friday, April 02, 2004

One Month Ago in Webmail History

On March 2, 2004, Traffick did the math, decided that Google Mail would mop the floor with Yahoo Mail.

I have to chuckle every time someone lectures me that portals are important because they're big and powerful and have many cool services, or conversely, points to some flaw in a major portal's business model. What these poor saps have no idea is that I've examined every side of those types of arguments for the past five years, and just to be safe, have taken pretty much every possible position on them. I can't possibly be wrong when I've got sound bites to cover all the bases!

But seriously. Over the past three years, this website has reminded people that in spite of its flaws, Yahoo was strong enough that it was just a matter of time before it enjoyed an economic turnaround. We pointed to the huge, untapped area of fee-based revenues and pleaded with Yahoo to stop clinging to its advertising model and to diversify. Not that they were listening, but smart management eventually got that percentage of fee revenue up to nice healthy levels, and Yahoo began to regain its former swagger. People who wanted to give up on it to soon pay too much attention to the newpapers. (Or they work for the newspapers, which gives them a really good reason to pay too much attention to the newspapers.)

Another slight pet peeve we've had is the constant downplaying of search in the reporting on portal ad revenues until it was finally too huge to deny. (In the past twelve months, 40% of Yahoo's revenues came from those "tiny little classified ads" that barely require anyone to schmooze or booze with ad execs... in spite of what a recent Fortune article would have us believe, Terry Semel's main contribution to the financial health of Yahoo has not been teaching its salespeople how to wine and dine.)

But a fundamental respect for the power of portals (the big three especially) doesn't change the obvious fact that Google is king of search and fast becoming a portal itself. Yet journalists and analysts have fallen all over themselves to warn Google that it wasn't up to the job. This has become a recent obsession on these pages: to dispel the media myths that Google's facing unbeatable competition just because Yahoo has a new search product, and has wondrous fee-based email and finance pages and auto classifieds, or because MSN has Hotmail and is working on a new search product and generally rules the world.

The only reason everyone used Hotmail and Yahoo Mail so loyally in the first place was the product quality, period. Traffick argued that in our series of portal product reviews & related comments in January 2000.

By now, though, these "best" email products have fallen behind users's needs, skimping on storage (or charging up to $59.99 for a decent-sized box) and gravitating towards larger and larger animated ad banners even for paying customers, as I've repeatedly complained here. The time was ripe for Google, or anyone, to move in and fix the problem. Granted, they've fixed nothing yet, and we really don't know if their spam solution is as good as Yahoo's or MSN's. But it will be interesting to watch.

So what was Charlene Li of Forrester Research talking about last month when she argued that Google would have trouble competing with the portals because of its "deep-seated cultural focus on search"?

I retorted, in part:

Wha-? Fortunately for Google, the planet has a deep-seated cultural focus on search. And in spite of their grandeur, clever use of punctuation, and recent profitability, the public has retained a deep-seated suspicion of portals while being quite happy to make use of the portal services that prove most useful. Like e-mail. The portal service that is going to lose big market share to Google next quarter.

One hates to break it to Yahoo, but losing huge webmail market share to GMail is a foregone conclusion, and is going to happen as fast as you can say "gigabyte."

As it has been from the get-go of the portal wars, product matters. Brand and monopolistic power matter to an extent, but users have by now learned how to wriggle out of the clutches of big companies who overcharge for junk. (See: AOL.) So Yahoo! Mail and Hotmail are quite simply going to have to improve. They can't just pull the Flash-animated wool over people's eyes.

Hilariously, the latest media spin -- if only in headlines, but they do shape how people form opinions from their daily newspaper -- is "but whoa, hold on, Google will be serving ads in email!"

Hold on yourself. Did I mention that Yahoo not only charges me $59.99, but also show me gigantic screen-dominating ads, making it cumbersome to navigate through basic daily tasks? Oh, right, I've whined about that about eight times here lately. Need I also now mention that keyword-searching my Yahoo inbox sometimes takes upwards of 45-90 seconds to retrieve results? I love Yahoo Mail, and I'll happily admit that some of the advertising in there, like the Vonage ads, is pretty effective. There's room for a variety of approaches, to be sure. But then again, if GMail is 10X bigger, 5X faster, and twice as good at filtering spam, once I get accustomed to the new GMail power, will I ever set foot inside Yahoo Mail again? I have my doubts. Twenty million or so other users might be thinking along the same lines.

Welcome to portalhood, Google. Live long and prosper.

Posted by Andrew Goodman




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