Yahoo: The road forward?

A new era at Yahoo began the minute when Carol Bartz signed the agreement with Microsoft, giving the right to conduct searches on Yahoo’s huge network of Web sites to Microsoft in exchange for 88 percent of the revenue generated by Microsoft’s Bing. Having finally offloaded its search business to Microsoft; all Yahoo has to do is figure out what comes next.

Yahoo is first and foremost a media company and is in the business of attracting as many people to its properties in hopes of selling lucrative ad deals on those pages. While Google is has the best combined relevant search results and efficient advertising, the ads on pages model has not always worked on the internet.

The tie up with Microsoft Yahoo seems to signal that  Yahoo doesn’t have the ability or the will to take on Google directly. Carol Bartz has been arguing that the company should focus on what it does best and leave the technology to others.”We’re not a search company,” Bartz had said earlier, discussing how Yahoo is a different company than Google or Microsoft. Now that she’s made that distinction official, what is Yahoo?

It’s where people find relevant and contextual information.”It’s news, it’s sports…home page, mail. It’s a fabulous place.” (The definition thus being very diffused). That’s a content company, turning the focus to how Yahoo should produce the kind of content and services that will keep existing users coming back for more and attract new ones to the site. One wonders  if Yahoo just turned itself into a bigger version of AOL.

On the services side, some areas, like Yahoo Mail, Flickr, and Messenger, are clearly where Yahoo is unlikely to take its foot off the gas pedal. Same for Yahoo’s mobile strategy, a part of the Internet that is very much up for grabs, unlike the more mature PC-oriented Internet experience. 

So Yahoo isn’t getting out of the technology business entirely. Yahoo will continue to need ways to keep its new home page hooked into the wider world of social networking, real-time communication, and things not even thought of yet, and that will require smart, savvy engineering.On the content side, Yahoo will have to figure out whether it needs to expand its current offerings, pare down some of the less frequently used products, or tap the outsourcing strategy in this area as well. There’s been quite a lot of turnover in recent years at Yahoo, but there are probably enough people left who remember that the last time Yahoo tried to play a prominent role in designing its own content, it didn’t end well.

Is Yahoo on a path to becoming the world’s biggest content aggregation site?There’s enough guaranteed revenue in the deal to keep things quiet for a while, but it’s going to take two years–at minimum–for it to substantially shape the company. What will Yahoo look like then?

Ref: http://news.cnet.com/8301-17939_109-10299313-2.html?part=rss&subj=news&tag=2547-1_3-0-20