Yahoo! (NASDAQ:YHOO) has announced the launch of its redesigned email service, Yahoo! Mail (Ymail), in a company blog post Tuesday.  This is the first major redesign project under Marissa Mayer, who joined the company as CEO earlier this year. In our opinion, the company’s prior target of redesigning email is in the right direction, since Yahoo! Mail is still used by over 250 million unique visitors worldwide. Yahoo!’s email redesign could also help retain present users and attract new ones, especially in emerging markets.
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Why Focus On Email?
Yahoo!’s email service is currently ranked the third in the world in terms of unique visitors and is only behind Google’s (NASDAQ:GOOG) Gmail and Microsoft’s (NASDAQ:MSFT) Outlook.com.  Yahoo! Mail’s traffic numbers indicates that it is the “Number 1” email provider in the United States in terms of unique visitors, which is over 75 million.
However, risks for Yahoo! exists in maintaining its user base and driving page views on email, especially on the web. ComScore estimates that Yahoo!’s web based email usage fell around 16% year-over-year in September while usage for Gmail was up 16%.  To check this rapid decline in usage, Yahoo! had to take initiatives to improve its mail platforms. As a result, the new, cleaner, easier and faster user interface is a good way to to retain users and keep its page views consistent.
Redesign Can Attract New Users
In our opinion, the mobile redesign of Yahoo! Mail combined with the fact that international usage of the platform is higher than the domestic usage, shows that Yahoo! has a substantial opportunity on the international front to drive new user growth. Since an email account is an important part of the internet experience (there were 3.14 billion email accounts in 2011), new internet users in the emerging markets who have yet to use an email platform can be attracted to Yahoo! due to the improved user experience. 
If Yahoo! is successful in attracting new users, it can also leverage this user base to drive mobile page views on its properties. This is a relatively big opportunity since ad-spending on mobile platforms is not in the same proportion as to the amount of time that users spend on their mobiles. For example, in the United States, users spend approximately 10% of their time browsing content on mobile phones, while only 1% of advertising budget is spent on the medium. We expect this to even out in the long term (which is an estimated $20 billion opportunity in the United States), giving Yahoo! a chance to grow revenues through mobile. 
We currently have a $20 price estimate for Yahoo! which is approximately the same as the current market price.Notes:
- Reimagining email to be…email, Yahoo! Blog [↩]
- Gmail finally beats Hotmail, according to third-party data, GigaOm [↩]
- Marissa Mayer Announces A New Yahoo Mail — And It’s By Far The Most Important Move She’s Made Yet, Business Insider [↩]
- Internet 2011 in numbers, Pingdom [↩]
- 2012 Internet Trends, KPCB [↩]