I use Yahoo every day. It is my Firefox homepage and accounts for more of my web traffic than does any other site on the Internet. I'm clearly not alone. According to this Alexa chart, Yahoo serves almost 3x as many pages as Google.
Seven years ago, I invested the time to customize a My Yahoo page and have incrementally added quite a bit to it since then. It has become my primary RSS aggregator, my sports and finance ticker and my first source of news. (I would even use it for web searches, but for some idiotic reason, the folks at Yahoo have not programmed the page to load with the search box in focus; as long as I have to make an extra click, I might as well click in Firefox's Google box.)
In a piece for Fortune last week, David Kirkpatrick warns Wall Street not to "stare so hard at Google you miss Yahoo." He highlights Yahoo's relatively cheap P/E ratio of 24x (including a bunch of one-time gains last year including the sale of some Google stock) when compared with Google's 67x . He argues that Yahoo is catching up to Google in terms of search quality and has made some smart moves to capitalize on social networking with its Flickr and Delicious acquisitions. He believes Yahoo will soon be considered Google's peer.
My hedge fund friend thinks otherwise. He questions Yahoo's future relevance entirely. His argument goes something like this: AOL was "stage one" of the Internet -- consumers did not even know how to get online in the early days, and AOL's sheltered dial-up service made it accessible.
Yahoo is stage two of my friend's "training wheels for the Internet" theory. As everyone learned to get online, they needed a place to go that conveniently aggregated their media content and introduced new services. Yahoo served that purpose.
In stage three, however, as consumers finally comprehend and master features like bookmarking and RSS aggregating, will Yahoo still have a purpose? Though I'm currently a devoted Yahoo user, I tend to agree with my hedge fund friend. This Alexa graph supports his theory:
In terms of reach, Yahoo is falling behind. The number of consumers relying on Yahoo the way I do is not growing. Google has overtaken Yahoo as the primary Internet home page, and as users like me find superior best-of-breed alternatives to replace the components of their My Yahoo pages, I suspect the flat blue line in the graph will trend downward.