Apple Drops Yahoo Weather App as Mayer Plans Mobile Search

Yahoo, Marissa Mayer

Among Apple’s (NASDAQ:AAPL) many announcements at its Worldwide Developers Conference was one with big implications for Yahoo (NASDAQ:YHOO): with iOS 8, Yahoo will no longer provide the iOS weather app. Apple will instead get its data from the same place that Yahoo has been getting it: the Weather Channel. The move is a setback for Yahoo at a time when the company is planning new mobile efforts, and a return to search and search advertising that promises to be an uphill battle.

Apple’s switch away from the Yahoo weather app is a victory for Weather Channel CEO David Kenny and a loss for Yahoo CEO Marissa Mayer, who has been working to increase Yahoo’s mobile presence and its integration with Apple products, as reported by Kara Swisher at Re/Code. Instead of taking the Yahoo weather app to iOS 8, Apple has opted to replace Yahoo’s weather app — which repackaged data provided by the Weather Channel — with a new app equipped with better location relevant data and longer range forecasts, information which the Weather Channel did not provide to Yahoo.

As Swisher points out, Yahoo is unlike Apple, Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and even Amazon (NASDAQ:AMZN) in that it doesn’t offer a smartphone of its own. It relies on its apps, and deals with companies that do produce smartphones, to drive traffic back to its site. Having its weather app pre-installed on Apple devices led to more downloads of its full weather app, and possibly its other apps as well. Its offerings for iOS range from a Yahoo news app to an email app to a messenger app. Swisher reports that Yahoo cites 400 million mobile monthly active users. They don’t earn the company revenue, but do drive up traffic.

The loss of the iOS weather app leaves Yahoo vulnerable, and some speculate that the stock app that Yahoo has also provided for Apple will be the next to go. Swisher says that Apple could potentially choose a provider like Bloomberg, CNBC, or Reuters to provide that information. The loss of that app would be a blow to Yahoo as well, with its online traffic likely to take a further hit. But Marissa Mayer has been working to revamp the company’s search offerings to compete with Google and Microsoft — and eventually to reach the goal of integration with Apple from another angle.

As Swisher reported earlier in the year, Mayer spearheaded two internal initiatives, called Fast Break and Curveball, to make a move into algorithmic search and search advertising. The two dovetail with Mayer’s broader plan for the “three S’s” — stream, shopping, and search. Mayer seems especially focused on the move back into search. However, that’s a complicated issue, since Yahoo has a long-term contract for Microsoft’s Bing to provide organic search results and search advertising. Since Microsoft is contracted for traditional web search results and ads, Mayer’s efforts are focused on mobile and contextual search features.

Unlike a keyword search, which uses simple, deliberate input from the user, a contextual search gives its results based on a variety of digital and physical information gleaned from the user like location, time, and the pages that the user has previously looked at. Even Google, the reigning search engine giant, has yet to master contextual search, which could generate significant revenue and play a big part in Yahoo’s mobile strategy.

Reporting on Mayer’s search initiatives in February, Mashable gave an example of what contextual search results might look like: “A normal search for sushi might turn up a Wikipedia page or various websites about sushi. If one were to look up sushi from a phone through a contextualized mobile search, it could conceivably return nearby sushi restaurants with review, advertisements and coupons.”

Contextual search makes a lot of sense for mobile, and the market is still open becase a dominant player hasn’t yet emerged. Yahoo is looking to develop its own contextual search engine, compete with Google and Microsoft to gain market share, and then monetize that market share to sell advertising. Swisher says that contextual search “could be a big loophole” in Yahoo’s contract with Microsoft — which Mayer famously has been looking for ways to end, or at least circumvent.

Building a viable search engine would also help Mayer to reset her sights on integration with Apple, and to work toward her goal of making Yahoo the default search engine in iOS, as Swisher reported in April. (Google is set as the default, but users can switch to Yahoo or Bing manually.) However, putting the technology in place to create a contextual mobile search engine seems like a steep enough challenge for Yahoo, and convincing Apple to dump Google search would be another challenge entirely. After all, Apple dropped Yahoo’s weather app because it could get better data — and a better product — elsewhere, meaning that Yahoo would need to create a competitive, functional product to win over Apple (and users.)

If anyone is in a position to displace Google from its place of favor with Apple, it’s Microsoft. Bing has powered Siri’s search on the iPhone and iPad since last year, and TechCrunch reports that Bing will feature prominently into the upcoming version of OS X in the form of the Spotlight search feature. With that in mind, Yahoo with Mayer at its head will have a steep slope to climb — and while thinking strategically is necessary, it may be a little premature for Yahoo to aspire to build Apple’s default search engine before it has really figured out how that search engine will work.

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