Yahoo! (NASDAQ:YHOO) is really trying its best. The company deserves that nod and despite many critics emerging over the past few days regarding Katie Couric's decision to leave ABC to become Yahoo!'s Global Anchor, it's difficult to deny that it's a coup for President and CEO Marissa Mayer, who has only been in the job for a little more than a year. All the while, the Yahoo! name is trying to reinvent itself, especially with the acquisition of Tumblr in May. If these admittedly expensive moves will pay off dividends remains to be seen and, as detailed on The Motley Fool recently, the company is making some positive strides, but it's staring at another issue – the Yahoo! email service.


On Nov. 25, a humorous story appeared on The Huffington Post claiming that Yahoo! employees don't like using Yahoo Mail and the company is having a hard time convincing workers to use it. Now that's certainly a problem. The revelation came from a company memo seen by Kara Swisher from All Things D in the wake of consumer complaints over the email service's redesign. Many were unhappy, inside and outside of the company it would seem.

According to the memo, only 25% of employees at Yahoo! are using their own mail system. The rest are on Microsoft Outlook. So it appears that employees share some views with the audience, at least on the design and usability of Yahoo Mail, an email service that was once upon a time the most used in the world.

The memo stated: "Earlier this year we asked you to move to Yahoo Mail for your corporate email account. 25% of you made the switch (thank you). But even if we used the most generous of grading curves (say, the one from organic chemistry), we have clearly failed in our goal to move our co-workers to Yahoo Mail."

The line "we have clearly failed in our goal" is particularly gripping and is emblematic of the problems that Yahoo! need to address to making their email service easily accessible or even fun to use. The memo was written by Jeff Bonforte (SVP Communications Products) and Randy Roumillat (CIO) -- read it in full here -- and to their credit, the note wasn't presented as a scolding of staff but rather took a tongue-in-cheek approach to making a serious request to their workers. "Use it generously so we can make the improvements to make Yahoo Mail the unquestioned inbox champion of the world. I pitty [sic] the fool who resists," they said.

The future under Mayer

Thus far, Yahoo! has, under the helm of Marissa Mayer, cleaned up its home page a little so it's not a clutter of content. This may suggest that further email rejigging is on the to-do list as well because the company is on the right path, it would seem. But they should act fast.

According to a study published by research firm Radicati (Email Statistics Report, 2009-2013-PDF), the typical corporate email user sends 167 emails a day. This figure was published in 2009 and was projected to increase greatly by the time 2013 rolled around. The report had also claimed that in the four year gap, email user numbers increases from 1.4 billion worldwide to 1.9 billion. The central message to take away from all of this is that even with the inexorable rise of social media, email is still rising too and simply not going anywhere; making email services just as competitive as ever.

In 2012, Gmail surpassed Hotmail as the world's largest email service, clocking in with 425 million monthly active users. It knocked Hotmail off its perch, which it occupied for some time, and despite the Gmail tab redesign that was rolled out this summer, dividing user opinions on it, Gmail's user numbers are staying impressively steady.

Yahoo Mail used to be number one a few years ago but has since fallen to third and the news that employees aren't using it serves to remind Yahoo! on the need for a new take on their email service.

Broadly speaking, Yahoo!'s finances are on track. Their Q3 earnings, revealed in October, were exactly as analysts expected with revenues of $1.08 billion. While it's flat and not a sign of growth for Yahoo just yet, it's a step in the right direction, showing us that Mayer has a firm handle of this ship; and with the acquisition of Ptch, recently they continue to look at new avenues. But the company could also be looking at a missed revenue opportunity if their email service isn't exploited to its full advantage.

Google meshes targeted ads with their Gmail service, based on information transmitted through the user's Google account. Google's activity of collecting data about users is heavily criticized but Gmail has attracted many users for years. Now they've expanded the ads to Gmail on Android and Google's ad revenue of $43 billion this year is largely thanks to such targeted advertising, according to The Guardian.

While Yahoo! may not want to get into the same business of collected data and targeted ads in the same fashion that Google is, Gmail's figures still exhibit untapped revenue potential for Mayer and Yahoo Mail and considering their email service was once the number one ranked, returning to a reputable position is not an unrealistic undertaking. They just need to get their employees on board first.

Fool contributor Jonathan Keane has no position in any stocks mentioned. The Motley Fool recommends Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.