Yahoo! acquires Xoopit – Email goes Social
Yahoo! Inc (NasdaqGS:YHOO), provides internet services to users, advertisers, publishers and developers. The Company has been struggling to hold its market share among its top competitors (Google, Microsoft), especially in the search business and losing share to Microsoft’s BING while competing with young innovative companies in their core business areas (See more details in FOCUS’ Internet and Digital Information Quarterly Insights Report). Yahoo has more than 500 million worldwide registered users (excluding the 34% stake in Yahoo! Japan, and 44% interest in Alibaba Group).
Founded in 2004, Xoopit, a San Francisco based company provides email-based applications and social media indexing. The Company raised $6.5 million since 2006 from Accel Partners and Foundation Capital.
Yahoo acquisition of Xoopit is interesting because…….
Seeing the obvious – Although, email is unarguably the most important part our daily life, we cannot ignore the growing importance of social networking. A recent Neilsen study showed that people are spending more time on social networking sites than on email. Although, social networking has made significant progress, email hasn’t made major progress besides face-lifts and storage capacity. Therefore, the convergence of social media and email makes total sense.
The social media space has been quite active this year and Yahoo is not the only large player seeking to make a play in this space. Earlier this year, IBM acquired Outblaze to boost its cloud service offering in the B2B social media space. Outblaze provides white label email and social media services. Also, a collection of venture groups and Cisco made an investment of over $10M in Xobni (“inbox” spelled backward). Xobni provides solutions for email users to gain insight into their email usage patterns and allows Outlook users to track social networking profiles of their Contacts on sites like Facebook, Twitter, Linked-In, etc.
Value creation – According to Hitwise, Yahoo! Mail is the number one email site ahead of Windows Live Mail, Gmail and AOL Mail; and Flickr, another Yahoo! property is one of the fastest growing photo sharing sites. It is essential for Yahoo! and other internet conglomerates to create synergies and promote seamless collaboration among its various internet properties to provide value to users. This would enable better data mining, providing valuable information for advertisers, hence translating into dollars!
Technology and Intangible Value – In our earlier blog, we mentioned that Goliaths are Buying David’s to enhance their technology capabilities. Xoopit is rumored to have been acquired at a deal value of $20M. This appears to be purely a technology play to enhance capabilities as Xoopit does not have a sizable user base; it launched the beta version in March 2008. Besides being a great plug-in for email enhancement, Xoopit’s core value lies in its CloudQuery search technology to index and search structured and unstructured data and return customizable result sets.
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