If you want to talk about a company with problems, Yahoo! would likely come up in the conversation. The once unstoppable internet giant has quickly faded away from the spotlight, and, worse still, it has almost faded entirely from existence. With angry investors, impatient media, and one persistent Carl Icahn, Yahoo needs to get its act together soon if it wants to continue being independent. There are a few potential solutions to all these problems that might help Yahoo to right itself, but they are few in number.

Problems

Yahoo, as previously noted, has problems. The company has always lacked flair and ingenuity when it comes to creating something from scratch. When you evaluate Yahoo! Mail, Yahoo! Buzz, Yahoo! Video, Yahoo! Maps, My Yahoo!, Yahoo! Messenger, Y! Live, and many other products that Yahoo has either created or acquired, they are, admittedly, good, but most of these products are knock-offs of existing products and services, which, in many cases, are better than the Yahoo equivalents.

Yahoo does have a few gems, but, for the most part, attempts to leverage those successful products and services have either failed or have yet to be attempted.

The company is profitable, but that is not saying much.

I can’t begin to offer an explanation as to why Yahoo sat aside—seemingly paralyzed—while Google dominated the markets that Yahoo previously had so much control of, but I do know that it is time for Yahoo to take action and acknowledge their problems.

Search

Google dominates the search market—even that is an understatement; however, Yahoo was once considered the best search engine of the World Wide Web. Unfortunately, that didn’t last long—after Google came along, Yahoo barely stood any chance as the company never took serious competitive action. Google was receiving plenty of hype, and Yahoo’s search was not nearly as efficient, detailed, effective, nor clean.[1. Lev Grossman of TIME Digital wrote an article in May of 1999 about how a new breed of search engines were going to bring on the competition to companies like Yahoo. Google certainly lived up to the hype.]

I can recall frequently landing on Yahoo’s homepage with my 56k dial-up modem, and it is interesting to note that Yahoo tended to have the most complex home page of any site I can remember. Yahoo’s homepage is essentially a portal, but I have never been happy with it. I will state that Yahoo Search’s homepage is nicely done, but it would be better if users began at the Yahoo! Search or allowed users to specify like is currently done with Google’s iGoogle homepage.

Yahoo still holds enough control—granted, a minuscule amount—to the point where they can salvage their search business, so don’t count the company out yet. Yahoo ranks in a fairly distant second place to Google with regards to search engine traffic. It needs to take a very different approach to search if they stand to compete; however, I really believe that any company trying to compete with Google in the search market is a lost cause before it begins.

People have Google and Wikipedia. If live search, Cuil search, human powered search, and automated search can’t dethrone Google, what search engine can?

Advertising

Yahoo hasn’t had the best luck in the advertising department; although, most companies are struggling in the advertising industry. It has gotten so bad that Yahoo actually struck a deal with Google to have Google’s AdSense units displayed on Yahoo’s sites. If that isn’t a sign of detrimental times for Yahoo, I don’t know what is.

The company hasn’t been really open about its advertising performance, and there is no certainty to what Yahoo has planned. Yahoo actually does have an innovative advertising platform in the works, but more on that later.

Social Networks

A hit social network could have helped Yahoo, but most attempts have met failure head-on. The company has given some decent efforts to create these types of services, but the execution, marketing, and lasting appeal has always been lackluster.

Even though Yahoo has not had much success in the social networking arena, Yahoo’s executives seem relatively happy with the way things are going.

Lawrence Casiraya of Inquierer.net learned from Yahoo’s executives that the company is not afraid of other social networks. While other companies, like Facebook, are developing new, unique applications and services for social networks, Yahoo is content with the idea of integrating existing social networking services into Yahoo:

… Yahoo! executives, who held a short briefing with local media in a visit to Manila, stressed that the company is in fact embracing social networking as it introduces new features in tools like Yahoo! Messenger and Yahoo! Mail.

“Does it make sense to reinvent the wheel inside social networking services? Or do we take such services and instead integrate them into Yahoo!?,” answered Scott Dietzen, Yahoo! senior vice president for global communications products.

Dietzen went on to state that “… it is much easier for us to embrace new forms of social networking than the other way around.”

The irony in that statement is that Dietzen has practically represented Yahoo has a lazy company. It would appear that Yahoo no longer wants to actively develop new social applications and networks, but instead, they simply want to sit on the sideline and bring in data from others. What is forgotten is that sites like Google, Facebook, and Digg are already ahead of the game. Just as Yahoo sat on the sidelines when Google took over search, will Yahoo—again—be a spectator instead of an innovator?

Also, Dietzen, of course you don’t attempt to “reinvent the wheel inside social networking services.” You create unique, creative social networks that are able to compete with the likes of Facebook, Orkut, and MySpace. You take a completely different and smart approach to this problem. If you are not going to attempt to do this, get out of the business of social networks.[2. Allowing friends to edit the profiles of their friends in a wiki-like manner with Yahoo! Mash was, for lack of a better word, idiotic.]

Wall Street

Jerry Yang has confidence from a majority of Yahoo’s board members, but investors and Carl Icahn are not nearly as impressed. The investors are ready to revolt.

Mark Nelson, co-founder of Mithras Capital, is an impatient investor who owns around 1.7 million Yahoo shares. “These guys are just drinking their own Kool-Aid,” Mr. Nelson Stated. “They don’t get it. They don’t understand the realities of their business.”

John C. Dvorak, while on TWiT 154, called Yahoo a “junk collector” that “buys dumb things.” Mr. Dvorak also believes that the company is very disorganized, and has failed to capitalize on its properties.

A majority of the shareholders are of the same opinion. Many feel that the company has done little to restore competitiveness in-line with Google’s dominance over the past several years. They also believe that a lack of decision making at Yahoo has resulted in the companies demise—that is a given.

After Microsoft’s failed offer for $31 per share for Yahoo, the company was served up a dosage of reality. It really could be all over for Yahoo. The threat of takeover still looms, and the threat of having everything go downhill for the company and its investors is as high as ever.

Things could be worse—Jerry Yang has a 66.3 percent approval rate from investors.

Carl Icahn

Carl Icahn—this man is something else: a ruthless investor, a Yahoo disruptor, and he looks like a mob leader (all wonderful qualities, of course). Ever since Microsoft has showed interest in Yahoo, Carl Icahn has been in the newspapers.

Mr. Icahn is the man that wanted to seal the deal between Microsoft and Yahoo. The deal did not happen, but with him on the board, there is still an extremely small chance of this deal happening.

The only thing Yang can do is keep Yahoo profitable. If Yang can’t turn Yahoo around, Icahn is sure to be front page news somewhere in the world again.

Mr. Icahn now holds three seats on the Yahoo board, and this gives him quite a voice at the company (yet he didn’t even show up for the first meeting). Perhaps having someone so ruthless could end up being a good thing for Yahoo, but if Mr. Yang lets this turn into a negative influence, it will only hurt both parties.

Solutions

When problems arise, solutions generally follow, and Yahoo needs them now. The company’s disappointing performance must be put aside. These issues can be fixed.

Scaling Back

Yahoo needs to take a good deep look into their company’s infrastructure to see what is working and what is not working. If it isn’t working, dump it. If it isn’t making money, monetize it or sell it. If it is making money, make it even better.

Creating new knock-offs of existing products and services is futile at this point. Yahoo has acknowledged this, but the point of scaling back on things should ultimately result in more efforts put into developing products and services that are actually of quality and profitability.

Social Search

The one area that remains relatively untouched is social search. Google has already began experimenting with this, but I would hope that Yahoo was already working on a solution. I see this as one of the very few areas where a new or existing search engine can compete with Google. Why shouldn’t Yahoo attempt such a thing?

You don’t have to be a rocket scientist to realize that social search is the future. Having your peers, who share the same interests and search habits, influence search results while keeping those searches efficient, effective, and relevant is no easy task, but if a company can pull it off, I would be every impressed. Google might be reaching too far by trying to integrate this into Google Search, but even so, it will not be attempted on such a scale that I speak of. Yahoo should be working on stuff like this instead of messing around with social networks and knock-offs.

This is something that I can see Yahoo doing to make up for all those poor excuses of social networks that they have attempted before. The company has one of the most popular social bookmarking sites—tie it in with a social search functionality. Do something innovative here, Yahoo.

The One Stop Shop

The reason why Google is so successful is partly because most of what you want to do is already at your fingertips at Google. If you want to email someone, develop a presentation, catch up on news, and chat with colleagues, you can do all of that with Google’s services. Since many users already have an account with Google, why bother switching? Well, people are not switching—it is convenient—and that is the point.

Tighter integration is one of the few ways that Yahoo can promote its brand, and it is a shame that this has not been done already.

Yahoo, if you want to do something impressive, consider this—redesign every service that the company has and make them look and function in a similar fashion (e.g. Microsoft Office), and then integrate everything together so that it is a truly unique and efficient experience for the users. One of my biggest complaints with Google is that I can access my email, but I have to open a new tab to access Google Reader and Google Documents. Why can’t it be done in a way where everything is accessible on a single page? I’m sure someone is smart enough at Yahoo to figure it out. If I can come up with this idea, surely someone at Yahoo can put it into action.

What I just described is the type of change that is required to generate some buzz with Yahoo, but I don’t think the company is organized enough to pull something like this off. If Yahoo was able to organize such a massive effort, it might be one of the best decisions the company has ever made.

Identity

Miguel Helft of the New York Times wrote a great piece titled “Yahoo Is Still Searching for, Well, Yahoo.” Helft reported that Yahoo’s identity crisis is taking its toll on the company.

Yahoo needs to sit down and have a nice long chat—which might take days or weeks—about determining what Yahoo is as a company. Not only does Yahoo need to find out what their focus is, but they need to let the public know what they intend on being. Yahoo’s public image is tarnished, and that is something that is needing fixing.

The company needs to redirect its focus to one or two specific areas that can be capitalized on. They have spread themselves too thin, and it is no longer viable for Yahoo to manage all these different types of services unless the company takes my previous advice.

Successful Endeavors

Amidst all the chaos, there are some amazing products that Yahoo has in its arsenal.

Yahoo! Finance

Yahoo! Finance is widely considered the best place to go for all things financial, from stock prices and charts to company fundamentals and technicals.

Google Finance has improved quite a bit, but it still lacks when compared to Yahoo! Finance. This is another opportunity for Yahoo to monetize a service. Yahoo, why not provide a service that allows people to access better and faster data for a small subscription fee? Live streaming charts for a competitive fee sounds like a decent offer.

I would like to imagine that Yahoo! Finance is making some amount of revenue for Yahoo.

Delicious

Delicious (previously del.icio.us) is one of the most popular social bookmarking sites on the web. Yahoo acquired this technology in 2005, and it has been met with much success. With the recent release of the revamped Delicious, which was gathering dust in the beta stage, Yahoo is enticing former users and new users to give the service a shot. The only problem with Delicious is that it hasn’t been monetized.

Considering how popular the service is, it is disappointing to know that Yahoo hasn’t taken advantage of advertising opportunities. StumbleUpon, for example, allows publishers to pay for extra traffic; one would think that Yahoo could figure out something similar to this concept—perhaps have sponsored listings on the front page? Regardless, a few basic advertising unit would be better than nothing at all.

Either way, Delicious is continuing to grow, and with some smart marketing and clever monetization techniques, Delicious could help contribute to Yahoo’s revenue.

Delicious is also a gold mine when considering the amount of information that can be used to help Yahoo target users for advertisers. I am unsure if Yahoo currently does anything like this, but it would certainly be a shame if the company was not.

Flickr

Most photography enthusiasts and pros around the globe have probably heard of Flickr. The photo sharing site has slowly evolved into one of the most visited sites by photogs. It was snatched up by Yahoo in 2005, and it should be considered one of Yahoo’s best moves in the 21st century. Flickr has well over 25 million unique visitors per month, and according to Compete’s statistics, it is even outperforming Digg.

Yahoo has managed to successfully monetize Flickr with the addition of “pro accounts.” It has been estimated on a Flickr discussion board that the company brings in around $2.5 million for the company, but these estimates are extremely unreliable.

There are remaining questions over Flickr’s future. Things get more complicated when you consider that the two co-founders recently departed from the company. Competition from sites like SmugMug is really heating up.[3. I am considering the possibility of signing up for an account with SmugMug.] This means that Yahoo should expect the competition to possibly lower revenues from Flickr in the long-term—unless Flickr can bring in more new users to offset the competition and lower prices.

Yahoo! AMP

Yahoo still has potential to push out some impressive AdSense-like technologies. This was, after all, one of the areas that Microsoft was interested in acquiring from Yahoo.

Yahoo! AMP is the tool that advertisers are ready to pounce on. This tool is targeted to advertisers and marketers who want to get their products and services noticed. It features a revolutionary interface that makes me excited.

It will, supposedly, make the life of an advertiser much easier while providing those advertisers with detailed information. Sure, it has been done before, but there is always room for improvement.

Unfortunately, AMP was supposed to be released over a month ago, but AMP’s Senior Director of Engineering, Adam Hyder, departed from the company yesterday. These delays are really frustrating for everyone involved, but it would be in Yahoo’s best interest to tighten all the bolts instead of rushing the service to market.

This could potentially be the all or nothing project that Yahoo is relying on. This technology will have to stand up to what Microsoft and Google will be pulling out of their hats to compete with it. One can only hope that Yahoo can deliver the goods and bring in the advertisers and publishers before it is too late.

The Future

What lies ahead for the future of Yahoo? Not many can say. Some believe Yahoo will fold to a better offer. Others believe the company can make a huge comeback. I just think it is time to get real about what Yahoo has to accomplish.

Yahoo is a company with so much potential; the company had so much of a presence on the web that these problems should have never arisen. For far too long has Yahoo stood on the sidelines with its passive mentality. The company now has to pick up from its pathetic showing after the past few years.

I am sick of seeing this company let others step all over its face. What is the point of Yahoo hanging around if they are not going to do anything to save themselves? I am sure that Mr. Yang is a smart guy, and I know people like to route for the underdog, but what in the hell was Yahoo thinking these past few years? What were the thousands of employees at Yahoo doing all this time? I just want some explanation from Yahoo as to why they allowed this to happen. It is beyond disappointing.

To make matters even more dramatic, Jerry Yang has decided to keep his company in light of a great offer from Microsoft. He has basically ensured the company’s investors that Yahoo is more valuable than what the market believes. If Jerry doesn’t have products and services in the works that can restore Yahoo to the great power that it once was, I think he is a complete idiot. This might end up being one of the most disappointing decisions in the tech industry if Jerry Yang has deceived his investors. Then again, it might have been the underdog comeback that could see some Hollywood action. In the end, Jerry Yang is either going to be the hero or the idiot when this whole thing ends.

All of this is in the past, but the time that Yahoo has is quickly fading away. Yahoo, it is time to deliver the goods and pull off some miracles.