Seven implications of Yahoo! 360

As rumored for a long time (under the code name Mingle), Yahoo! announced the launch of Yahoo! 360, an integrated suite that includes web email, instant messaging, blogs, photo sharing, and music downloads.

David Jackson of the The Internet Stock Blog points out seven key implications of this launch (republished with permission, with my comments in italics):

Implications:

1. Confirms competiton at the bundle level.

Yahoo’s launch of 360 confirms that the large Internet companies will compete to provide an integrated and personalized package of web email, instant messaging, blog publishing, personalized news reader and photo sharing. Bill Gates has already stated that this is Microsoft’s goal. DT: “embrace and extend”.

2. Convergence of communication and publishing.

Note that this package is a mixture of communication (email, IM) and publishing (blogs, photos, recommendations) tools. Publishing via blogs and photo albums is a form of personal communication, particularly if permission to access content can be restricted. And it’s two-way if readers can leave comments.

3. Stickiness rules.

Why is the package so attractive to the large Internet companies? Because it is the ultimate sticky application that generates total user loyalty. It’s much harder to move your email, photos, blog and IM address to an alternative provider than it is to move just one of those. And if your applications are networked into theirs (for example you share recommendations with your family and friends), it’s even harder to get everyone to move. (A point made by Charlene Li.) DT: In the short term, yes. However, the real future is services not dependent on a specific platform. For example, my blog alone provides a big part of the social network functionality, and I’m not dependent on any one company to maintain and extend that blog.

4. Competiton at the bundle level relieves competition at the product level.
Google’s release of Gmail and Google Maps shows that it is targetting Yahoo!’s stickiest applications with technologically superior products. What’s Yahoo! to do? Shift competition to the socially-networked bundle level and leverage its enormous installed base of Yahoo! Mail and My Yahoo! users. DT: Of course, if Yahoo! created products of comparable sophistication, they’d be in better shape. Google is emulating Microsoft’s intense focus on recruiting the best and brightest, and it pays.

5. Six Apart apart?
Does this mean that Yahoo! won’t acquire Six Apart? That depends. If Yahoo’s goal is to provide a set of integrated personal tools, it doesn’t need Six Apart. But if it wants deeper functionality and a large installed base of blogs on which to promote its upcoming contextual advertising service, then Six Apart is still highly attractive.

6. Early battle for wireless market share.
Note the emphasis in Yahoo’s press release on mobility and local services: “mobile blogging (moblogging) and other sharing tools for recommending favorite movies, restaurants…”. Competition at the bundle level will spill into the provision of wireless content and services.

7. The potential saviour for AOL.
As competition moves to the ultimately sticky personal communication and publishing bundle, AOL stands to gain most – if it gets its act together. Why? AOL mistakenly bundled dial-up access and closed content, and is therefore losing customers in droves. But AOL can survive if it can transition its customers to the correct bundle of access-agnostic sticky applications. It’s got the pieces: largest market share in instant messaging, millions of email users, blogs, lots of personal customer information. Now it needs to tie them together and unbundle access from content and communication.