Yahoo 2005 Annual Report Download - page 20

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14
COMPETITION
We operate in the market for Internet products, services and content, which is a highly competitive market
characterized by rapid change, converging technologies, and increasing competition from companies
offering communication, information and entertainment services integrated into other products and media
properties. We primarily compete with companies to attract users to our website and advertisers to our
marketing services. We expect the market to become increasingly competitive if online marketing
continues to grow and gain acceptance on a global basis.
Globally, our most significant competition is from Time Warner’s America Online business (“AOL” or
“America Online”), Google Inc. (“Google”) and Microsoft.
The principal competitive factors relating to attracting and retaining users include the quality and
relevance of our search results, and the usefulness, accessibility, integration and personalization of the
online services that we offer as well as the overall user experience on our website. In the case of attracting
advertisers, the principal competitive factors are the reach, effectiveness and efficiency of our marketing
services as well as the creativity of the marketing solutions that we offer.
We also face competition from companies focused on markets where expertise in a particular segment of
the market may provide them a competitive advantage. Two of these competitors, Amazon.com, Inc., and
eBay Inc., are expanding their positions as e-commerce merchants to leverage advantages from the scale of
their commerce platforms to offer informational, community, and communication features that are
competitive with the some of the services we provide.
Internationally, we compete with local portals that are predominantly supported by the local
telecommunication providers, or local providers of specific Internet services locally designed and
marketed, which give them a potential competitive advantage because they typically already have a direct
billing relationship with their users.
We believe that we are effectively competing in the market for Internet services as we continue to refine
our search technology and build onto our existing online properties and services and further improve the
experience of our users.
Additional information regarding competition is included in Part I, Item 1A “Risk Factors” of this Annual
Report on Form 10-K.
PRODUCT DEVELOPMENT
We continually enhance and expand our existing offerings and develop new offerings to meet evolving user
needs for technological innovation and a deeper more integrated user experience.
As a complement to our core engineering and production teams, we also have scientists working in our
Yahoo! Research Labs dedicated to developing novel algorithms and technology that empower users,
businesses, advertisers, and publishers worldwide to maximize the social and economic potential of the
Internet. Yahoo! performs research to address fundamental problems facing users, such as: making their
search for information on the Internet easier and more efficient; bringing them tools to help solve their
problems; finding new and better ways for them to connect and communicate with family and friends; and
guiding family and friends towards high-quality products, songs, movies, and other resources. We also help
advertisers connect with customers most likely to be interested in their products, maximizing the
advertisers’ marketing investments and providing a better overall user experience.
Our engineering and production teams are primarily located in our Sunnyvale, California headquarters
and in Burbank, California; Dallas, Texas; and Bangalore, India. Our research teams are located in our
Sunnyvale, California headquarters and in Berkeley, California; Burbank, California; New York, New
York; Barcelona, Spain; and Santiago, Chile. Domestic teams handle most international product