Yahoo to focus on search - and Google

CEO Mayer says Yahoo plans to invest in improving its search technology, while maintaining its Microsoft partnership

Yahoo CEO Marissa Mayer says the company plans on a big comeback in the Internet search business, which means directly taking on industry giant Google.

Yahoo CEO Marissa Mayer at the World Economic Forum in Davos, Switzerland last week. (Photo: Pascal Lauener/Reuters)

Mayer, named CEO of a struggling Yahoo last July, faces a daunting double task of rehabilitating Yahoo's search business while taking on a company -- her former employer -- that has so far withstood all search adversaries, analysts say.

"If Yahoo is to be a powerhouse in search again, they need to do something bold and unique to steal some limelight from Google," said Zeus Kerravala, an analyst at ZK Research. "But I'm not sure they know [how]. I'm not saying they don't have a shot, but it's slim."

Mayer outlined her Internet search and other plans during Yahoo's fourth-quarter earnings call on Monday.

The CEO said Yahoo will focus building technology that can improve search results and on building the company's share of desktop and mobile device users.

Search, Yahoo Mail and the Yahoo homepage, are in the most need of work if Yahoo's goals are to be met, she added.

"There's a lot more potential here," Mayer said. "Overall, search is a key area of investment for us. All the innovations in search are going to happen at the user interface level going forward. We need to invest in those features, both for desktop and mobile [devices]. I think both ultimately will be key plays for us."

She did note that overhauling the Yahoo search business doesn't mean that the company must ditch its partnership with Microsoft.

The 2010 deal calls for Microsoft's Bing search engine to power Yahoo Web sites. With the deal, Yahoo essentially tossed out its own search engine in favor of Bing.

At the time, analysts viewed the partnership as a joint effort to chip away at rival Google's broad search success. Three years later, Google remains dominant while Yahoo's market share has slipped.

Mayer, a high-profile executive at Google before leaving to lead Yahoo, still hopes the Microsoft partnership can help improve the company's share of the Internet search market.

"We're really excited and happy to work with Microsoft," she said. "Our teams are working incredibly well together. Overall we have a big investment we want to make and a big push in search. We've lost some share and want to regain that."

Analysts say the task will be a difficult one for Mayer and Yahoo.

"I think it's going to be difficult for Yahoo, even with Microsoft, to match Google," said Brad Shimmin, an analyst with Current Analysis. "The question is should they [try to] and can they compete with Google?"

Yahoo was at one time a very strong player in the search business. The problem for Yahoo is that those days are gone and Google is now the leader by a wide margin.

Kerravala noted that Yahoo would need a major slip up from Google to create an opening in the search business.

"Yahoo would have to see something that Google misses," he said. "Google is on top of search, that's been proven over the years." he added.

"Given [Yahoo's] history, I don't think she's thinking too big," Shimmin said.

"In the past, Yahoo was very much a powerhouse in the search market. Time has passed, though, and Google has built on its success, so it will be difficult for Yahoo to achieve what it once had," he added.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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