Home Yahoo! 2.0: Its Reorganization and Future

Yahoo! 2.0: Its Reorganization and Future

Yahoo! is changing. Terry Semel’s resignation and co-founder Jerry Yang’s return to the CEO position is one of the most visible changes. Yahoo! has always been harshly criticized for not being a technology company and lagging behind Google. They have even been criticized for not having the foresight to buy Google early on when the opportunity arose and missing a big opportunity. But in my opinion, Yahoo!’s mistakes should be viewed with more understanding. After all, Yahoo! was one of the first companies to experiment with the Internet industry at that level. Their field was all new and full of uncertainties. In time, with more data, things have become more quantifiable and able to be analyzed. Google was lucky to be able to follow Yahoo!, although they also had what turned out to be a better approach. But the important point is actually to learn from past experiences – and Yahoo! seems to have learned and is starting to apply those lessons for the future of the company.

Let’s take a look at what has changed at Yahoo! over the last few years…

Yahoo! – first to understand wisdom of crowds

The Del.icio.us and Flickr acquisitions were proof of this. For Yahoo!, Flickr is not just a photo hosting service and del.icio.us is not only about bookmarking. Yahoo! recently announced that Flickr is now integrated with Yahoo! Search. And similarly, del.icio.us is fast becoming an integral part of their web search service. These pushes, combined with stronger algorithms, may help bring Yahoo! leadership in search. They are certainly already the leader in image search due to Flickr.

My real question is why Yahoo! insists on not implementing video to Flickr – that could certainly distract Flickr’s focus on photos, but since video and photo are very relevant to one another I would guess most Flickr users would prefer to use the same service for video hosting too – eventually this could bring the same advantages to Yahoo! in the video space as well.

Yahoo! is now decentralized

Yahoo! learned one big thing from their late 90s purchase of GeoCities: rebranding kills. People don’t like to visit soulless sites, it’s very important to figure out what brought success in the first place and keep these elements intact. Yahoo! now applies its past experiences to Flickr and other acquired sites, such as MyBlogLog. These newly acquired sites remain as separate properties with integration taking place at deeper levels only. This is something that Google learned from Yahoo! – take a look at YouTube, for example, it’s still basically the same web site.

Yahoo! focuses on money making properties

Yahoo! hopes its Panama strategy and the RightMedia acquisition can take the company to the next level by boosting advertisement revenues and ensuring a solid financial structure. This is not new to Yahoo!, as they acquired paid search provider Overture in 2003 for the same reason.

Yahoo! is getting chic

The Flickr and OddPost acquisitions brought some Javascript mastery to Yahoo!, and along with the del.icio.us and Upcoming.org acquisitions, a whole lot of web 2.0 cred.

Yahoo! now speaks to the top of the PR pyramid: geeks

Early adopters sit atop the PR pyramid, and carry a lot of weight and influence. Most early adopters in the Internet industry are either active open source users/contributors or at least, open source aware people. Google was the first to leverage this niche in its global expansion and now Yahoo! seems to be doing the same by releasing comprehensive APIs and open sourcing most of its Javascript stacks under very liberal licenses.

Yahoo! is innovating

With their San Francisco development lab, Brickhouse, Yahoo! has created an atmosphere where a group of talented people are encouraged to think outside the box and freely innovate. This can foster creativity in all areas at Yahoo!, bring good PR and cut the dependence on external acquisitions to some extent. Yahoo! Pipes was just a beginning, so we will see how it goes.

The future

And finally let’s take a look at what the future may hold for Yahoo! The company’s billion dollar bid for Facebook shows that Yahoo! foresees a future where the web will consist of social interactions. In other words, they seem to realize that in five years, most of us will be starting the new day from our favorite social networking site, and launch the applications and services we need from within that site using the default search box and so on. They may have missed the Facebook opportunity, but the recently acquired sports community Rivals.com can still be a good niche to attack and grow out of.


So it’s not all doom and gloom for Yahoo!. There are actually a number of positive and promising signs at the company, although they have certainly missed the boat at times (e.g. Google, Facebook) and seemed muddled at others (search, Yahoo Photos vs Flickr). What do you think about Yahoo!’s future as a technology company? Can they turn it around?

Yahoo! office photo from Flickr user P?•lL??berg.

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