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When Marissa Mayer became CEO of Yahoo three years ago, the former Google executive staked her reputation on one thing: bringing Yahoo, an ailing pioneer of the early Internet, into the smartphone age.
To that end, Mayer made one of her biggest moves just over a week ago, unveiling a mobile app called Livetext, a video-chatting service aimed at teens. It’s only the second brand-new mobile app the company has introduced during her tenure.
If Livetext is Yahoo’s play to win over young people, then their reaction is key. I decided to check personally with two of them: my nieces, ages 18 and 19. Both of them are avid Instagrammers and Snapchatters.
I used old-school technology, texting them to ask if they’d heard of Yahoo’s new app. They responded immediately: Neither of them had — which is fair; the app was only a week old. I explained what it is: a cross between texting, Apple’s FaceTime video chat and Snapchat.
One of my nieces was hesitant. “Idk teens are used to having those things be separate,” she wrote. (“Idk” is Internet-speak for “I don’t know.”)
The other was a little more open to the idea. “That’s kind of intriguing,” she said.
Obviously, neither seemed overly enthusiastic. But lucky for Yahoo, things change quickly in teen world. I’ll ask them again in a few months.
The mission for Yahoo is clear: Convince people — especially young ones — that Yahoo is the app to tap when they pull out their phones. If the company can do that, it will be able to get marketers to give them their ad dollars to reach the elusive demographic. The company also reportedly has a minority stake in Snapchat, and Yahoo’s 2013 acquisition of Tumblr for $1.1 billion was largely seen as an attempt to buy hipness among young people.
With Livetext, people connect over video and chat using the cameras on their phones. But just as Snapchat has its self-destructing messages and Twitter-owned Vine has its 6-second rule, Livetext has its own schtick: video chatting with no sound. Yahoo says the lack of sound allows people to be less inhibited, as when they are texting ordinarily.
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The company also put some money down on the bet. Two days after unveiling Livetext, Yahoo said it was buying Polyvore, a social shopping site with a strong presence on mobile devices.
The announcements underscore Yahoo’s attempt to cash in on the popularity of several apps that have caught the attention of young people, including Instagram, Vine and Snapchat, which has a valuation of at least $15 billion.
Analysts have taken a wait-and-see approach. “This could earn a place with teens,” said Brian Solis, a principal analyst at the research firm Altimeter Group. “It’s certainly clever, and we live in a world where cleverness is a commodity.”
My nieces might not have heard of it, but early reviews for Livetext are favorable. It’s garnered a 4.5-star review (5 is best) in the Apple App store, after more than 200 reviews.
One user, Nikki 1290, wrote, “Even though late to the party yahoo proved again with this app. used for a few min and loving it.” Five stars.
Playing catchup
Yahoo also needs to make up ground in the mobile arena more broadly.
Almost every move Mayer has made since taking the helm has been in the service of giving Yahoo what she considers a fighting chance against rivals like Apple, Google and Facebook — smartphone and tablet industry leaders. To do that, she’s spent more than $2 billion combined to acquire more than 50 startups, a move intended to create a stockpile of mobile-engineering talent.
“I came in with the thesis that Yahoo needed to reinvent itself with a mobile lens,” Mayer told the Medium Backchannel blog in March.
Yahoo declined to make her available for this story.
To call Mayer’s job an uphill battle would be an understatement. When more than 95 percent of smartphone owners on the planet turn on their devices, they’re already in a universe created by Apple or Google — either the iOS operating system software, which powers iPhones, or Android, the Google-made operating system that powers more than 80 percent of the world’s smartphones.
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But not having its own operating system is no excuse for Yahoo. Facebook — whose software doesn’t power smartphones either — has found a way to rake in big bucks from mobile devices. In 2014, the largest social network in the world pulled in $7.4 billion from mobile ads. By contrast, Yahoo made $1.2 billion.
The same goes for attracting eyeballs. Facebook and Google supplied 8 of the top 10 most popular smartphone apps in the United States in May, according to ComScore. Yahoo’s apps didn’t crack the top 15.
Mayer is hoping that will change with Livetext. For some analysts, the company doesn’t need to hit it big every time to succeed. Instead, Yahoo needs to create a large portfolio of apps and see if a few catch on. “They’ll need to hope one will be a home run,” said Sameet Sinha, an analyst at the investment bank B. Riley and Co. “But some will be middle of the pack. And some will fail.”
It’s similar to the strategy Facebook has embraced over the past year. The company has released several apps tailored to do specific things, from swapping ephemeral videos with friends to communicating in groups. One of them is called Paper, a news reader; there’s also Hyperlapse, a time-lapse video tool; and Riff, a video-sharing app.
But unlike Yahoo, Facebook has its heavy hitters to lean on: its original social network, Instagram and chat service WhatsApp are the leaders in their individual categories. It’s even gotten 700 million people each month to use Messenger, its communication tool that helps users send messages and video chat.
That’s the kind of lineup Mayer would dream of having. But to land one of those breakout hits is easier said than done.
“For Yahoo to come up with something, it won’t be easy,” said Sinha.
