Bangalore: Exactly a year after the Yahoo-Microsoft search alliance was proposed, the Yahoo-Bing combo has begun unfolding integration results. The initial gains in search share in the US market, as shown by July data from comScore Inc. for both the parties, will further improve with time, says Yahoo.
“It’s getting to be showtime,” says Raymie Stata, Yahoo Inc.’s chief technology officer (CTO). “The changes will be gradual; people will see improvements in products, though it’ll be hard to parse what is due to transition and what due to ongoing product innovation,” said Stata, currently in Bangalore.
He has taken over at a time when critics see Yahoo as a company that’s not only losing market share and revenue, but moving away from technology to being a media company. Stata rebuts this: “I like to describe Yahoo, now, in the past, and the future as a technology company that runs a media business.” And even as comScore data for Asia Pacific in July says Google Inc. remains the favourite in the region, reaching 55% of the population, Stata is happy with Yahoo’s growing user base in Taiwan, Japan and Korea.
Barely a month old in his new role, Stata may just as well spring some surprises as he sets about changing the historical CTO role in Yahoo, which also meant the head of engineering in the past. “It’s now going to be a functional role, a technologist should think about technology, not worry about administration.”
Experts say Yahoo under-invested in technology infrastructure for a very long time, and accumulated a lot of “technical debt”. Because of this, it became very hard to bring any new consumer-facing product or feature to market, said Sharad Sharma, former chief executive, Yahoo India R&D, and present chairman of Nasscom Product Forum. “Ari Balogh (former CTO) started to fix this during Jerry Yang’s tenure. Carol Bartz (present chief executive) has kept that fix going. Sometime in late 2011, the new technology infrastructure will be in place.” This will allow Yahoo to innovate faster on the consumer side of its business, Sharma added.
For now, all eyes are on the Bing-Yahoo changeover. With the transition, Stata says his company will be totally dependent on Microsoft Corp. for the sponsorship results for the advertising aspects of search, but on the technology front, this will allow it to focus on display advertising. The display ad business has been a sore point for the search company, especially as rates of cost per thousand impressions in the entire industry have been on a decline and Yahoo hasn’t figured out a way of dealing with it.
Yahoo needs to come up with a plan quickly, says Sharma, though he thinks in the captive search query business alliance with Bing will keep Yahoo viable.
Stata remains confident that the revamped Yahoo search, powered by Bing and its own new technologies, including “content optimization”, will create excitement for audiences. In the coming days, as it moves towards “the right media exchange”, content optimization—where instead of showing pre-programmed results, it creates a portfolio of potential results for different users with different combination of arts—is something Yahoo is focusing a lot more on.
With no particular strategy on how much content it wants to generate, and how much it wants to aggregate from partners, Stata says Yahoo will keep its options open.
Understandably, search and content remain high on Yahoo’s agenda, but it’s another technology space, cloud computing, where its competition is active. But Yahoo’s silence is conspicuous. In fact, Yahoo is seen as too cautious and risk averse. Stata thinks otherwise. According to Yahoo, its Hadoop project, an open-source software framework for handling large data sets in the enterprise segment, is a fairly big commitment. “Our cloud computing effort is for internal consumption, to make us more agile and operationally efficient. Through Hadoop, I would argue that Yahoo has a much bigger impact on enterprise large data computing than Google has,” said Stata.
Still, experts say, public cloud initiative is necessary to grow an ecosystem of developers and companies around its platforms. “Even though its impact as argued may be more, monetizing open-source software is still tricky,” said Surya Mukherjee, lead analyst, technology and industry, at research firm Ovum. Yahoo recently announced that it will open up its Yahoo Messenger application programming interface (API). This is an entirely different direction from Google, which is slowly getting into deriving revenue from software licences and subscriptions. Perhaps Yahoo believes that open-source projects and APIs would encourage higher usage, attracting greater ad revenue, added Mukherjee.
India remains pivotal in Yahoo’s engineering efforts, and for Stata the association goes back beyond Yahoo—the engineering team of Stata Lab, his email client start-up that Yahoo acquired in 2004, was based here. Today, significant work, in content and advertising, is done out of India, where 200 engineers have now been moved to Microsoft’s new development centre.
As Yahoo transforms itself, using its “light weight” application development platforms, it thinks online media users will finally get some personalized experience. “Personalization has been a cliché for long, now it is a reality.”