Yahoo 2008 Annual Report Download - page 26

environments such as those available on the desktop and PC. The lower resolution, functionality, and memory
associated with alternative devices currently available may make the use of our services through such devices
difficult, and the versions of our services developed for these devices may not be compelling to users,
manufacturers, or distributors of alternative devices. Each manufacturer or distributor may establish unique
technical standards for its devices, and our services may not work or be viewable on these devices as a result. As
we have limited experience to date in operating versions of our services developed or optimized for users of
alternative devices, and as new devices and new platforms are continually being released, it is difficult to predict
the problems we may encounter in developing versions of our services for use on these alternative devices, and
we may need to devote significant resources to the creation, support, and maintenance of such versions. We may
be unable to attract and retain a substantial number of alternative device manufacturers, distributors, content
providers, and users to our services, or to capture a sufficient share of an increasingly important portion of the
market for these services, and, therefore, we may be unsuccessful in attracting both advertisers and premium
service subscribers to these services.
To the extent that an access provider or device manufacturer enters into a distribution arrangement with one of our
competitors, we face an increased risk that our users will favor the services or properties of that competitor. The
manufacturer or access provider might promote a competitor’s services or might impair users’ access to our services
by making its devices incompatible with our software or by not listing our services in a convenient directory. If
competitive distributors impair access to our services, or if they simply are more successful than our distributors in
developing compelling products that attract and retain users or advertisers, then our revenues could decline.
In the future, as new methods for accessing the Internet become available, including through alternative devices,
we may need to enter into amended distribution agreements with existing distributors to cover the new devices
and new agreements with additional distributors. We face a risk that existing and potential new distributors may
decide not to offer distribution of our properties and services on reasonable terms, or at all. If we fail to obtain
distribution or to obtain distribution on terms that are reasonable, we might not be able to fully execute our
business plan.
In international markets we compete with local Internet service providers that may have competitive
advantages.
In a number of international markets, especially those in Asia, Europe, and Latin America, we face substantial
competition from local Internet service providers and other portals that offer search, communications, and other
commercial services. Many of these companies have a dominant market share in their territories and are owned by
local telecommunications providers which give them a competitive advantage. Local providers of competing online
services may also have a substantial advantage over us in attracting users in their country due to more established
branding in that country, greater knowledge with respect to the tastes and preferences of users residing in that
country and/or their focus on a single market. Further, the local providers may have greater regulatory and
operational flexibility than Yahoo! due to the fact that we are subject to both U.S. and foreign regulatory
requirements. We must continue to improve our local offerings, become more knowledgeable about our local users
and their preferences, deepen our relationships with our local users as well as increase our branding and other
marketing activities in order to remain competitive and strengthen our international market position.
Our international operations are subject to increased risks which could harm our business, operating results,
and financial condition.
In addition to uncertainty about our ability to continue to generate revenues from our foreign operations and
expand our international market position, there are risks inherent in doing business internationally, including:
• trade barriers and changes in trade regulations;
• difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations
as a result of distance, language, and cultural differences;
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