Apple, Yahoo tie-up: What are the possibilities?
The companies' executives have reportedly met about further collaboration.
By Chris Ciaccia
Since taking over Yahoo (YHOO), CEO Marissa Mayer has made major changes to both corporate culture and the company's line of thinking. A closer relationship with Apple (AAPL) would continue to change the perception of Yahoo as a force in mobile.
Citing a person familiar with the matter, The Wall Street Journal reported Mayer has met with Apple to discuss new ways to collaborate. Yahoo already provides data to the iPhone, including the Stocks App and the Weather app that come preinstalled on the iPhone and iPad, utilizing Yahoo Finance and Yahoo's weather, respectively. Yahoo also provides data to Siri, Apple's voice assistant.
Mayer has said collaboration is the way to go, especially when it comes to mobile and making money from it, since Yahoo does not have a mobile operating system. On the company's fourth-quarter conference call, Mayer noted Yahoo intends to do more, and a relationship with Apple could be just the start.
"With any platform shift, revenue always follows users, and Mobile will be no different," Mayer said on the call. "Smart monetization of this usage is inevitable. We intend to participate fully in the innovation and experimentation required to make Mobile a material part of our business."
Yahoo has countless Web properties and content it could load on Apple's iOS platform, including more content from Yahoo News, or perhaps Yahoo Answers, which Mayer in the past has said is "an undervalued property," talking about the app participation there and compelling number of pageviews.
Perhaps a recent acquisition by Yahoo could be the key to a bigger relationship with Apple. Yahoo recently acquired Summly (TheStreet), a mobile product company designed to get information faster, easier and more concisely to users. Summly could be Yahoo's hope to circumvent Google (GOOG) in Apple, especially if it's tied up with Siri.
For now, Apple has tried to move away from Google services on its iOS devices, including the botched Apple Maps, but Google still remains an important part of iPhones and iPads, with YouTube, Google Maps, and other properties. Apple has said in the past it will not compromise on quality for its users, and Google's products still remain best in class, at least for now.
Mayer's Yahoo and Tim Cook's Apple seem to be a natural fit when it comes to a partnership. The two companies have a common "frenemy" in Google, and working closer together makes sense. When news broke last month that Yahoo was looking at larger acquisitions, I opined that a closer relationship between the two companies wouldn't hurt. I suggested that Mayer should look at acquiring Yelp (YELP), which already has a presence on iOS, via Apple Maps.
Apple sold over 70 million iPhones and iPads in its most recent quarter (TheStreet), and is estimated to sell more than 200 million iOS devices this year. Any incremental revenue that Yahoo can generate from an increased partnership with Apple would not only boost Yahoo's reputation among developers and Silicon Valley, it would help reinvigorate growth at core Yahoo, which is what Mayer has been paid handsomely to do.
A large portion of Yahoo's share price rise has been due to the increased value of its Asian assets, namely Alibaba and Yahoo Japan, but core Yahoo is slowly starting to turn around. Yahoo was able to demonstrate annual revenue growth for the first time in four years in its fourth quarter. Any additional revenue would continue to show that Mayer is turning core Yahoo around, and the run up in the stock price is about more than just the Asian assets.
Though no deal is forthcoming between the two companies, the possibilities should make Yahoo investors reaffirm in their conviction that Mayer is the right person for the job.
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