As Yahoo Falls, Google Remains On Top

The most fascinating aspect of digital media is how fast things change. Within the span of 3 years, an internet startup, once flying high can see it’s stockprice plummet to unprecendented lows or bought by a competitor at rockbottom prices. Within 3 years, new technologies are introduced that can make some of the earlier innovative inventions seem outdated. Email services are revolutionized, virtually anyone with a PC can become a blogger and a citizen journalist and search is apart of the fiber of our lives.

So, in 2005, when John Battelle wrote his book titled , “The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture”, is anyone surprised how much has changed and how much has stayed the same since his book was published?

Well, the thing that has stayed the same is that Google is still number one. Number one in search, number one in advertising, number one in popularity, and number one in plain old coolness. Now, I know it may sound like I am drinking the “GoogleAid” (I wonder if I should copyright that phrase!) but, it is all based on reality and cold hard facts. Google Inc. was incorporated on September 7, 1998 and 10 years later, Google is trading at a whopping $362.75.

In 2005, Battelle wrote in The Search, “Google’s competitors are legion, but the most important of them all, at least in 2005-2006, is Yahoo. Microsoft, like an aircraft carrier lurching into a ten-mile tack, will certainly be a force to reckon with by 2007, but Yahoo is Google’s main foe in the present day, and it is striking how similar, yet distinct, the two companies really are”.

Now, here’s what has changed. On Tuesday, October 21, 2008, Yahoo is reportedly cutting at least 1,500 employees from its workforce. In addition to reducing its workforce, MSNBC reported that Yahoo is not only considering closing some U.S. offices but also outsourcing some of its jobs overseas to lower-paid workers.

So, where did Yahoo go wrong and Google continue to go oh so right?  For starters, maybe Yahoo should have allowed Microsoft to buy them at $33 a share back in May. But, Yahoo Chief Executive and co-founder Jerry Yang put the kibosh on that idea and now Yahoo is paying the cost of that fatal error.

In “The Search“, Battelle wrote that Google’s founders, Sergey Brin and Larry Page are exacting managers and you get the impression reading the book that Brin and Page rule Google with an iron fist and that is somehow a negative. About Yahoo, Batelle calls Jerry Yang and David Filo “self-effacing, deflective of credit, and quick to delegate authority and responsibility to others”. If only, Yang would have done that when he decided to turn down Microsoft’s offer.

And, as the US economy remains in freefall and consumers, companies, advertisers, and the like cut back on spending, Google still remains on top of the heap as Yahoo is heading toward the trash heap. And Yahoo’s advertising model has just not been as effective as Google’s.

So, for all of the negative press that Google gets about being too secretive, doing business in China, and Page and Brin being the ultimate micromanagers,the end result is as Yahoo falls,  Google remains on top.