Yahoo Tries to Become the Cool Kid -- By Being More Open

by Reuven Lerner - Apr. 25, 2008Comments (2) | Trackback URL

Yahoo! used to be the coolest Internet company around. Started by two Stanford PhD dropouts, Yahoo began by organizing a list of Web sites, then by incorporating a sophisticated search engine, and then by creating a large number of Web applications and portals.

And then, almost overnight, something happened to Yahoo. Two other Stanford PhD dropouts started another search company, Google, which became the Internet's new darling -- not just as a respected brand, or as a place for the tech elite to work, but also as a business bringing in amazing revenues and profits. Yahoo's fortunes began to sag, with various executives trying to lead the company into a number of directions, and with thousands of layoffs in early 2008.

The biggest and most surprising blow of all came in February 2008, when Microsoft offered to buy Yahoo for what was then $44 billion in cash and stock.

The tech industry offered many different reactions to this buyout offer, but the general theme seemed to be that (a) Microsoft was desperate for an Internet strategy, (b) Yahoo was looking for a way to profit handsomely from its Internet properties, (c) the combination of Microsoft and Yahoo didn't seem like it would really help either party in a significant way, and (d) it wasn't obvious just how Yahoo could stop Microsoft from successfully finalizing this purchase.

Yahoo, under the direction of founder Jerry Yang, might ultimately have to give into Microsoft's purchase bid. But you can't say that he, and the rest of Yahoo's engineers and strategists, aren't doing their best to turn Yahoo into a more interesting, and even more profitable, Internet company.

Perhaps the boldest statement in this direction came earlier this week, when Yahoo announced its intention to open its search platform. Google has long allowed others to build applications using its search system, but with a host of restrictions -- including the rule that you cannot create a business based on Google's search engine or other applications, such as Google Maps. Yahoo seems to be taking a page from the open-source playbook, saying that their data and services are free for the taking, letting anyone mix and match Yahoo's data to create a host of new, specialized services.

Yahoo is going even further than this, offering a slew of services that will make every element of Yahoo services embeddable and "platformizable." Third-party developers will be encouraged to use Yahoo's services for their own purposes, in ways that are new to -- and perhaps wildly different from -- Yahoo's original goals. This means that while Yahoo is embracing OpenSocial, they are also creating all sorts of other APIs to go along with OpenSocial, to make all of their applications socially aware. Now, this strategy raises a huge number of questions:

  •   What parts of Yahoo's search will people be able to change?
  • What will be considered "core," and thus unchangeable?
  • Will third parties be able to share in advertising and other revenue generated by their new search systems?
  • Will there be a marketplace for such search front ends?
  • Will it be possible to integrate Yahoo's search with that of other companies?
  • How will this integrate with OpenSocial, Facebook, and other "social networking" APIs, including those that Yahoo has embraced?
  • And of course, will this really change Yahoo's bottom line?

And finally, the biggest question of all is whether this is an attempt to bring in more revenue, let alone profits, for Yahoo -- or if they are simply trying to demonstrate their technical prowess and community awareness, in order to raise Microsoft's bid and/or bring other potential bidders to the table.

Whatever the reasons, this strategy promises to bring many new open-source developers into the Yahoo fold, creating new applications and services based on Yahoo's technologies.

Which of Yahoo's services are you most interested in incorporating? And do you think that these steps bring Yahoo closer to being an open-source company?


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balakrishna korrapati uses OStatic to support Open Source, ask and answer questions and stay informed. What about you?

2 Comments
 

Y!OS. Yahoo!... Operating System?

They definitely have great properties to open up. Was at the conference - 120B page views per month! That's INSANE!

They are also top in 7 portals! If they can _actually_ get their act together, as companies move to brand marketing, they will be well positioned. Plus, with deep content sites, opening them up in an easy manner _should_ lead to better viral distribution. YUI is a great offering, mainly because it is well documented, with rich examples. Let's hope the existing offering is similar.

0 Votes

No matter how open or how cool they try and make themselves, it is still a poorly run company that is going to be swallowed by Microsoft or someone else. Personally, I rather see them integrated with Microsoft rather than partner with Google which would really make Google an overwhelming monopoly on the internet!

0 Votes
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