Paid Content is reporting that Yahoo! may be preparing to cut as much as 20% of its global headcount. Another source in the article says it’s only 10%. The company denies it, but there is a sense of inevitability about it all.
What’s not inevitable enough at the moment is some kind of merger between Yahoo! and its old friend AOL. Who ends up being West Germany and who ends up being East Germany in that union is a technicality. The key point is that there are at least two reasons why having two stand-alone internet assets like these makes no sense anymore.
First, duplication. in the North American market, there is massive overlap of services and not really much to differentiate the two companies’ operations. At a strategic level, they are pursuing similar things, and are beset with the same challenges. Operationally, they present similar types of content in similar ways. The sites even look the same!
Second, territorial synergy. Outside North America, and particularly in Japan, Yahoo! is much stronger than AOL. AOL tried, during the past three or four years, to give itself a more global presence, but abandoned that strategy after Tim Armstrong became CEO and as the ravages of the Global Financial Crisis changed priorities dramatically. A combined AOL-Yahoo! entity would bring the best of both companies’ products to a huge proportion of the world’s population.
There was a time, before Google, smart phones and applications, when it looked like there was room for three global portal brands. But content is fracturing into verticals and niche sites, diminishing central brand awareness and loyalty. The tentative economic recovery makes the costs of running two similar ships look very big indeed. And the portfolio of content and services each company offer is not being supplemented well by the corporate parent. When will the madness end?