Yahoo Paid $30 Million in Cash for 18 Months of Young Summly Entrepreneur's Time
Earlier today, Yahoo said it had acquired the trendy and decidedly stylish news reading app Summly, along with its telegenic and very young entrepreneur Nick D'Aloisio. — Yahoo said it plans to close …
Context & Ripple Effects
Summly had already positioned news summaries as a consumer product in its push to make concise news reading fashionable. Yahoo had also used an acquisition to bring in a social-TV product through its 2011 IntoNow purchase, giving the Summly deal a clear precedent.
Under Marissa Mayer, Yahoo has recast itself as a technology company while cutting several services to narrow its focus. Paying for Summly's product and Nick D'Aloisio while closing the standalone app fits a strategy of absorbing mobile capabilities rather than preserving every acquired brand.
First-order effects
- Summly users lose the standalone news-reading app as Yahoo closes it, while Yahoo gains its summarization product and D'Aloisio's work for the stated 18-month period.
- Yahoo commits $30 million in cash to a mobile-news capability at a time when 11 percent of its U.S. visitors were mobile-only in February.
Second-order effects
- Yahoo's mobile teams can prioritize Summly's technology inside Yahoo products rather than supporting a separate app, concentrating the acquisition's value on Yahoo's existing audience.
- The shutdown removes Summly as an independent outlet for news publishers, leaving Yahoo to determine how and where summarized stories reach readers.
Third-order effects
- If Yahoo repeats the IntoNow-and-Summly model, small consumer apps become a route for Yahoo to acquire product talent and features rather than durable standalone brands.
- Yahoo's combination of service cuts and targeted mobile acquisitions points toward a more centralized product portfolio, with consumer features folded into a smaller set of Yahoo properties.
The trend: Yahoo is using selective acquisitions and service rationalization to rebuild its mobile product capabilities around fewer owned destinations.