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December 06, 2006

Dissecting Yahoo's reorg

The anticipated Yahoo! reorg hit tonight -- the press release with all of the details is up on Yahoo!'s site, as well as stories in the WSJ and CNET. Here's a quick summary and my take of the announcement.

Yahoo! will be reorged into three groups:

1) Audience Group, focused on audience building. Note that this is not about content creation, but instead, "focused on building the largest and most valuable audiences and relationships on and off the Yahoo! network". Kudos to Yahoo! for understanding that this is not about creating more and more content destinations a la Yahoo! Food, but creating new experiences, especially with social media. Despite Yahoo!'s acquisitions of Web 2.0 darlings like Flickr and del.icio.us, Yahoo!'s social media initiatives remain mostly isolated, siloed products like Yahoo! Answers. The key to their success: spreading the social media mindset far and wide into all of the dark corners of Yahoo!.

One other key thing to note: Yahoo! recognizes that the audience relationships are key both "on and off the Yahoo! network". I think this is a huge recognition that the world does not revolve around the the yahoo.com domain and is moving into the mobile and devices space. I'm also looking forward to seeing the expansion of Yahoo! Widgets beyond desktop widgets and into more Web-based widgets a la Google Gadgets for Web pages.

Of all the groups, I think this is the one that will make or break Yahoo!'s strategy. In the end, the race is not to be the best search engine technology-wise, or to have the most advertisers. It's about being relevant to your audience, no matter where they go or what they do. This has always been Yahoo!'s core strength and I'm glad to see they are putting it front and center where it belongs. Now, they have this small detail of hiring an executive to lead this group....

2) Advertisers & Publishers Group.
In what is being seen as a CEO-grooming move, current Yahoo! CFO Susan Decker will be shifting over to the revenue generating side of the business. A key challenge: regaining momentum lost with the delay in launching the new search advertising platform. But even more important will be the integration of Yahoo!'s leading brand advertising solutions with search -- a potentially powerful and potent advertising offering that ties bridges the consideration gap between brand awareness and purchase.

3) Technology Group. This group centralizes technology development under CTO Farzad Nazem. This means that core platform infrastructure -- like social media, search, communication, and very importantly, profile/identity management will be under one unified roof. In the past, there appeared to be individual product teams developing these core technologies in isolation of each other. The most glaring example is identity. I actually have TWO profiles on Yahoo! -- one that's associated with my Yahoo! account and another that's part of my Yahoo! 360 page. The new centralized technology group will certainly help rationalize such inconsistencies, but a key challenge will be maintaining that consistency while giving enough room to allow developers to innovate broadly -- and quickly.

One last thing of note: the press release contained a coherent mission statement for Yahoo! -- "to connect people to their passions, their communities, and the world's knowledge." I really like this because it puts "people" at the center of Yahoo!'s strategy. Compare this to Google's mission "to organize the world's information" and you get an idea of how each company's battle plan. I have been a long-time Yahoo! user and this past year saw my slow defection from Yahoo! Mail to Gmail and Yahoo! Calendar to Google Calendar. I still use Yahoo! Maps for local searches, but am finding my loyalty shifting there as well to Google Maps simply because of the availability of the Google search box in my browser. It breaks my heart, because I do have this emotional attachment to Yahoo! and would love to give them a chance to win back more of my online experiences.

So kudos to Yahoo! for taking the bold, tough move -- I'm looking forward to seeing what transpires in the next few months. I'd love to hear what you think of the reorg -- and what you think Yahoo!'s biggest challenges going forward will be. How could Yahoo! win *your* loyalty?


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Comments

TK

Yahoo has lost my "loyalty" a long time ago. I don't work in Silicon Valley, I'm not a "techie", and don't know any programming languages, but to me Yahoo looks like somebody who's lost. Let's not even talk about Microsoft... I stopped using Hotmail 7 years ago.

For example, what are they doing with Flickr and Yahoo Photos? I think they should merge them into one product.

I love the simplicity of Google Maps. I also love Gmail, Calendar and Google Search.

Let's hope this reorganization will help Yahoo bring a few customers back.

Andrew

I agree with what you say about group 1: that Y needs to find a way to prosper on the post-portal web. To do so, it needs to solve a bigger user identity issue than the one you refer to under the group 3 heading. Even if I have just one Y-dentity, I still have different identities for the many other services I might want to mash up with Y's.
I posted a fuller version of this argument, and comment on your post, at changingway.net, but the trackback hasn't shown up here.

Chris Dowell

I lost my loyalty to Yahoo a couple years back. I have been a google fan the past 2 years. My friends have been a msn groupie and lately he has been switching to yahoo. As a real estate agent, I'm on the web all of the time and ease of use is important.

David H. Deans

Ms. Li, like you, I have migrated to using Google web tools to replace Yahoo. However, I still have fond memories of the web pioneer.

They have several web communities, where the whole could potentially be greater than the sum. They could regain my loyalty if they make an honest attempt to nurture those assets. I have written a column on this topic, and aggregated quotes from you and others to support my assessment conclusion, posted at AlwaysOn
http://alwayson.goingon.com/permalink/post/7842

djysrv

If you cover Yahoo on a regular basis sometime look into the way it treats its paying customers, that is, people who signed up for its so-called premium services. Here is a short list of short comings. I too have migrated to Gmail and Google calendar from Yahoo products.

* Staggering amounts of spam from the Yahoo domain itself -- I wrote a filter for my Yahoo Plus email that put any email from the Yahoo.com domain into a junk filter folder. It filled up with several hundred email messages a month. My complaints to Yahoo generated only automated responses and the spam from Yahoo keeps coming. Yahoo could be one of the net's biggest spammers because its does little or nothing to stop people from spoofing, or worse, using its domain name. I've canceled my Yahoo Plus email account.

* Aging email technology -- Yahoo's purchase of Oddpost and subsequent rollout of the BETA version of its news email remains mired in development. While Yahoo vigorously promotes the BETA, it is problematic to use. http://news.com.com/2061-10802_3-6115519.html The current email interface is still basically a text based system with a frosting of features like address completion.

* Why do portals like Yahoo and Google think the masses of ordinary consumers want to use BETA software? Yahoo and Google think it is OK to ask consumers for free advice for development of products they will eventually use to generate revenue. I'm not trying to sound like a tough guy, but my message to Yahoo and Google is if you want my feedback on BETA products, be prepared to pay me for my time otherwise please don't bother. I want products that work the first time I use them and I'm willing to pay for that. Gmail, despite being in BETA, works like a final product. Yahoo's email, still in BETA, does not.

* Blogging software weak as decaf coffee - Yahoo's 360 blogging site is a cookie cutter product that offers blogging sites that are crammed with so-called user friendly features but which no serious blogger would likely use. Plus it lacks the ability to deploy RSS feeds, trackbacks, and other blogging tools other sites offer. Like Yahoo's other services there is no customer service, only a robotic auto response system that sends emails to customers based on key words in the incoming inquiry. I abandoned my Yahoo 360 site. In its reorganization and executive shakeups announced earlier this month Yahoo admitted to "inconsistencies" in the way it deployed its 360 product. I love corporate speak don't you?
http://news.com.com/A+revamped+Yahoo+turning+to+users/2100-1025_3-6141568.html

* Trojan horse tactics - Yahoo's latest download (December 2006) of its instant messenger software automatically redirected users email to Yahoo without their permission. It installed Yahoo email as the default email and populated right click menus on the desktop with Yahoo links. Yahoo later claimed the trojan horse behavior was a technical error. CNET didn't buy it.
http://news.com.com/2100-1038_3-6144286.html In fact once Yahoo's email is on your machine, it is hard to get rid of it. The use of third party software to edit the Windows XP registry is necessary. Tell me this isn't a user-hostile act by a desperate business?

I realize techno-blogs only has so many resources to cover Yahoo and chose to address the advertising revenue issue. I think there are reasons to address the product and customer issues. Reasoning by analogy, in diplomacy the press sometimes refers to a county as a "failed state." In my view Yahoo is on its way to becoming a "failed portal" unless it turns itself around and gets a focus on the customer.

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