Where did it all go wrong for Yahoo?

Looking to the future

With some acquisitions it seems as if Yahoo paid enormous sums of money for successful firms, only to lose the key people responsible for that success. It bought GeoCities for $4.7 billion - billion! - in 1999, but chief executive Thomas Evans jumped ship after expressing concerns that, flushed with cash from the dotcom boom, Yahoo was in danger of alienating key clients.

The same year, Yahoo bought web radio firm Broadcast.com for $5.7 billion. Most of Broadcast.com's key executives jumped ship shortly afterwards.

Another issue is that in many cases, Yahoo developed or bought me-too services that rivals did much better - but the tide is turning, and Yahoo has spent two years shutting down unwanted services.

It's a process that's still happening: GeoCities' closure was announced last week, travel bargain site FareChase got the bullet last month, and storage service Briefcase is on the chopping block.

Since 2007 Yahoo has axed bookmarking service MyWeb - one of three bookmarking services it offered - social network Mash, video service Jumpcut, Facebook-style social network Kickstart, video streaming site Yahoo Live, Meebo-style chat system myM, Twitter-style SMS service Mixd, eBay rival Yahoo Auctions, Google Checkout rival Bill Pay, Last.fm-style music service WebJay… you get the idea.

Of course, other firms have also dumped projects in the worsening economic climate, but not on the same scale - and many of Yahoo's ideas could have been successful had Yahoo taken a leaf out of Google's book and encouraged users of one service to use another. That, according to Web Pro News, is finally changing, with Yahoo making a concerted effort to integrate its various consumer services.

That's not the only sign that Yahoo is finally turning around. New CEO Carol Bartz is putting every single bit of Yahoo under the microscope, and has created a "wall of shame" for the products she isn't happy with. Chief technology officer Ari Balogh's job is to fix them.

Both Balogh and Bartz are hugely respected in the tech industry. Bartz's "fail fast-forward" rule - that is, don't be scared to try things, but if they don't work you need to move on fast - is credited with turning around ailing CAD maker Autodesk, while in 2007 Infoworld named Balogh as one of the top 25 technology bosses in the IT industry.

Last year, Balogh told the Web 2.0 Expo that "we are rewiring Yahoo from the inside out"; in Bartz, he might just have the CEO he needs to ensure he can do a proper job.

Microsoft, mobile and Yahoo's future

The prospect of a Yahoo/Microsoft partnership is the story that won't go away. "I think that there will be some sort of deal," Sterling says.

"Depending on what its particulars are it may be quite helpful for Yahoo on the display front and possibly even on the search front. It's hard to imagine how Yahoo is going to create the kind of growth the market wants. The market seems to want some dramatic statement or action such as a Microsoft deal, but beyond that it wants to see Yahoo return to its former glory or some version of that. It's hard to know in this competitive environment how that's going to happen."

It's hard to imagine Yahoo beating Google in search, but that doesn't mean there isn't an opportunity. While Google dominates mobile search, especially in the UK, Yahoo has excellent mobile applications and stacks of high quality content.

"The one area where I see Yahoo being able to ignite very dramatic growth is in mobile," Sterling suggests. "There is a tremendous opportunity there, and if they can exploit it and make few mistakes on it they can really be in a strong position… in the US and in Europe Google has jumped out to a similar position of dominance in the mobile market, but I do think that Yahoo has a broader array of things to offer.

"Search can be a beneficiary of that more holistic approach to mobile. I don't know if they'll achieve dominance, but I think they can close that gap more effectively than they have been able to do online…. Yahoo does have some of the top mobile sites, so I do think that they have a real competitive opportunity there that, if they do it correctly, could reinvigorate the brand and the entire business."