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With Yahoo buy, Verizon hopes to stay competitive in digital ad market

Matt Hamblen | July 26, 2016
But analysts question how easily Yahoo will be integrated into Verizon

Long-term Verizon strategy questioned

With Yahoo, Verizon gets into a "multi-method delivery" approach for services, especially as the number of new wireless subscribers has fallen in a saturated market, Gold said. "Verizon wants to find ways to increase average revenue per user (ARPU) through added digital services as well as with ads."

Verizon is also trying to undercut Google, as the Google moves into being a carrier and service provider, especially for digital homes and other Internet of Things scenarios, Gold said. "Google already offers a number of free services that they leverage for revenues, and Verizon is trying to make sure Google doesn't undercut them for customers. This is also an issue for AT&T."

Overall, one analyst said Verizon's purchase of Yahoo is high risk, although Verizon might take advantage of Yahoo's public cloud data centers.

"The acquisition is high risk, medium return, but the price was probably right," said Patrick Moorhead, an analyst at Moor Insights & Strategy. "I don't see the content as the win here, as Verizon won't necessarily know how to keep the quality and distribution relevant over time."

Moorhead added: "What I do like is that Yahoo has one of the largest and most sophisticated public cloud data centers and I think if Verizon wants to be a cloud player, they can learn a lot from Yahoo."

 

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