Call-the-Cloud

Yahoo announced today the next revision of their mobile strategy. Lots of press coverage, including the NYTimes which opened with the sentence: “There may not be a Yahoo phone in the works, but…”, an obvious comparison with the “Google Phone”. Man, that must be frustrating for Yahoo’s PR team.

Main reaction from the press is that, since this isn’t a Google Phone, it falls far short. However, the jury is still out on whether Android (Google’s OS for a phone) is a smart move. Google’s offering, a full operating system for a mobile device, is certainly more technically ambitious than Yahoo’s “Go” platform, a system for widgets that users can install on their existing phones. But you don’t necessarily win by writing the most code.

The problem with widgets

Widgets are small, lightweight pieces of software. On mobile devices, their main downside is that they can’t access the key features of the phone, like dialing functionality, or the contact list.

(This limitation is baked deep into the design of cell phones so it goes far beyond Yahoo’s control. Cell phones were designed to keep 3rd party applications in a very limited “sandbox” because wireless networks were designed assuming all end clients are well-behaved. A cell phone that misuses the connection with its cell tower — maliciously or not — could cause lots of trouble for the network, and other subscribers. )

Another problem with widgets is that installation can be cumbersome and different for each phone.

There are two ways to get an app on a cell phone

Google’s Strategy: Build a new OS for the phone, in which case you have maximum flexibility, but large barrier to entry (you can’t add Android to an existing phone).

Yahoo’s Strategy: Create a framework and developer ecosystem around mobile widgets, which gives you limited functionality but easy adoption.

Incidentally, this highlights nicely an important inflection point we should all be watching for: The first time that a mass market phone comes with an API (most likely Java) that gives access to core functions of the phone. That will be a game-changing moment.

Two advantages to Yahoo’s approach

1) Time to market
A few years ago, some people I knew at Yahoo told me they had an internal mantra of “fail early, fail often.” Meaning: “Run through many iterations of your idea quickly.”
I think this attitude is at work here. While Yahoo’s widget platform is available today on 30 handsets, it could be a year or more before Android phones are in the hands of a critical mass of people. In that time, Yahoo will be letting the developer crowd try out different apps, see what sticks, and maybe they’ll find a magic formula.

2) Carrier friendliness
The carriers are still gatekeepers to the mass market, especially in the US, and will remain so for at least the next 5 years. If you want to get anything on to the cell phone, you have to find a strategy that works from their perspective too. For a carrier, taking the plunge with a “Google Phone” (i.e. providing handsets that run Android) means giving up all control over the user experience. There’s no turning back. A widget strategy allows a less risky, incremental approach. But on the other hand, you can’t cross a chasm with small steps.

Ready for ads

One point that didn’t get as much attention from the press is that Yahoo is allowing developers to include display ads and sponsored search in their widgets so that they can earn money.

According to, Adam Taggart, a director of product marketing at Yahoo, they will even allow competitive advertising networks: “We’ll build a plug-in so you can bring that in”.

So Yahoo is providing a platform that allows for rapid iterations of mobile apps along two critical axes: features and ad model, with low barrier to entry and compatibility with a large installed base. Yahoo knows that the next Twitter is more likely to come from an unknown developer than inside a corporate R&D group. The creativity is always in the edges.