Yahoo! will close its online auction service for North America next month, signalling the internet powerhouse’s intention to focus on more profitable endeavours as it tries to snap out of a financial malaise.
The Sunnyvale-based company’s auctions in the United States and Canada will end on June 16, although some tools will remain accessible until October 29. The closure won’t affect Yahoo!’s auction services in Hong Kong, Singapore and Taiwan.
Yahoo! is retreating from North America’s auction market nearly nine years after launching the service.
The retrenchment coincides with Yahoo!’s plans to phase out its original photo service this summer in favour of a more recent offering, called Flickr, that provides more sophisticated tools for sharing pictures.
The decisions to close the auction and photo services provide the latest indication that Yahoo! is reassessing the value of its far-flung web properties in an attempt to reverse a revenue slowdown that has disappointed investors.
”Yahoo! is continuing to align our resources to focus on core strategic priorities and deliver a superior user experience, and as part of this effort, we are reprioritising some products,” the company said in a statement on Wednesday.
After stumbling through much of 2006, Yahoo! opened the first three months of this year with an 11% decline in its profit. The slowdown helped spur speculation last week that Microsoft might try to buy Yahoo! and forge a business partnership as both companies try to combat online search leader Google.
Yahoo!’s reshuffling mirrors some of the suggestions made last fall by one of the company’s own executives, Brad Garlinghouse, who had urged its management to pull the plug on some less popular or overlapping services in a widely distributed internal memo.
Garlinghouse’s missive became known as the ”Peanut Butter Manifesto” because it argued Yahoo! had spread itself too thin.
Closing the North American auction service was a ”no-brainer” because Yahoo! had such an insignificant market share, said Bill Tancer, general manager of global research for Hitwise, which tracks internet trends.
Yahoo! attracted less than 0,2% of the US traffic to auction sites during the week ended May 5, compared with nearly 85% for the long-time market leader eBay, according to Hitwise.
”If you can’t compete in the space, it makes no sense to be there,” Tancer said.
By closing its auction site, Yahoo! also might score points with San Jose-based eBay, one of the company’s major advertising partners.
Yahoo!’s closure of its original photo service is more risky because it actually is slightly more popular than Flickr. In the week ending May 5, the first-generation photo service attracted 6% of the US traffic in its category, compared with 4,8% for Flickr, Hitwise said.
But Flickr tends to attract more urban consumers who tend to spend more on technology — a potentially more lucrative demographic that Yahoo! apparently hopes to build upon.
Yahoo! is encouraging the users of its original photo service to embrace Flickr. Recognising not everyone will want to make the leap, Yahoo! is offering ways for users to transfer their photos to competing services, including Shutterfly, Photobucket, Kodak Gallery and Snapfish. — Sapa-AP