I think Yahoo is unique among current companies for several reasons. First, it's got a foot firmly planted in both Silicon Valley and Southern California — two places with business models that just can't seem to get along (SOPA? PIPA? Hollywood?). And it's been this way for a while, going back to the days when Terry Semel was CEO and Yahoo was looking a lot more like a media company than a tech company. (Yahoo also has an office in New York, which adds yet another wrinkle, as the Big Apple is the capital of media.)
Second, Yahoo still has a huge number of users, some 700 million, but it can't seem to grow its revenue. This has caused great turmoil at the company and no end of speculation about its future. But why does it have so many users? Because it's one of two big holdovers from the Web 1.0 era, before the dotcom crash. The other is AOL. (Microsoft and Amazon are a different story, by the way.) Both companies occupy a lot of Internet mindspace. But no one thinks they have the same potential as Facebook (which, interesting, Yahoo is now suing, and Facebook is suing back).
Third, Yahoo is very much out of the two major Internet trends: social and mobile. This is where the innovation is, whether the tech world is pushing the envelope. Just looks at how fast Instagram went from $0 to $1 billion.
Yahoo wants to do something about this. This includes laying off thousands of workers. And for CEO Scott Thompson, it means — you guessed it — a corporate restructuring. This is from his memo, obtained by various news outlets:
It’s time for Yahoo! to move forward, and fast. And as we do, I want every one of us to keep one thing top of mind: what we do is about our customers, not about us. For Yahoo! to win in our core business, every one of us must put our customers first. Specifically, we must focus all we do on the users who trust us to give them personalized content and communications, and the advertisers who want to connect with our users. To be very clear, our highest priority is winning in our core business and that will earn us the right to pursue new growth opportunities.
To accomplish that we’re establishing a new leadership structure, organizing all of our activities around Yahoo!’s customers. Effective May 1, Yahoo! will operate in three groups — Consumer, Regions and Technology — all supported by our established Corporate teams. Each of the three groups will be charged with delivering the best customer experiences and have very clear accountability for getting results.
This sounds very much like Yahoo is refocusing itself on being in the content business — being a media company — rather than trying to compete with its tech betters in the innovation Olympics. I've argued before that Yahoo should recast itself as a media company. The New York Times' Bits blog seems to think this is what's afoot:
Based on the restructuring, it appears Mr. Thompson plans to hedge much of Yahoo’s future on the media and content properties it hopes will tether visitors to its site and lure back advertisers, as well as on the data it has on its users.
Exactly! The sun has set on Yahoo when it comes to moving the needle on tech. But it still has LOTS to work with, and although the online advertising game is ever-changing, Yahoo continues to have those million of users. Restructurings can be a sign that a company is in a whole world of hurt. But in this case, it could be just what Yahoo needs to stay relevant.