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Yahoo! remodelling itself on its users
Expect social media features, say analysts...

By Elinor Mills

Published: Thursday 07 December 2006

Yahoo! users are likely to see less entertainment programming and more consumer-created content as part of a broad reorganisation that funnels more than a dozen product groups into two operational units, according to experts.

The reorganisation comes as Yahoo! struggles to curb losses in market share and revenue to Google. It also follows the delay of its new advertising platform and a drop in third-quarter profits. The company's stock price has dropped about 30 per cent since the beginning of the year.

The Audience Group, created by the merger of seven product groups, will "build social media environments" across the Yahoo! network and further extend into mobile and IPTV, chief executive Terry Semel explained in a company-wide internal email. The Technology Group, which will provide the infrastructure to support the operational groups, will aim to get "every user on the Yahoo! network to participate... through tagging, reviewing, posting photos/video, etc", wrote Semel.

Yahoo! has a few overlapping products as a result of acquisitions, such as bookmarking site Del.icio.us and photo-sharing site Flickr, that could get combined, analysts said.

Greg Sterling, principal analyst at Sterling Market Intelligence, said: "We will see products merged, maybe Del.icio.us and MyWeb or Yahoo! Photos and Flickr. There were probably too many people working on too many products in parallel."

There will be a stronger focus on what the audience is interested in, which could include the integration of more social media features into the existing media products, said Charlene Li, an analyst at Forrester Research.

Yahoo! could also integrate its user identities into the different services, such as Yahoo! email and Yahoo!'s 360 social networking, Li wrote in a blog. "The new centralised technology group will certainly help rationalise such inconsistencies."

Some Yahoo! products that have floundered, such as My Yahoo!, could even pick up traction as a result of combining technology infrastructures and making it easier for people to use multiple services, said Mike Boland, a senior analyst at The Kelsey Group.

Users can expect to see less original programming, such as the entertainment shows that media unit head Lloyd Braun was hired to create, Boland and the others said. As part of the reorganisation, Braun is leaving the company, along with chief operating officer Dan Rosensweig and John Marcom, senior vice president of international operations.

Li said: "Entertainment shows are expensive to do. They may keep Yahoo! Tech and Yahoo! Food but they may enable users to add more content. For instance, I can't even save recipes on there into a recipe box."

Meanwhile, chief financial officer Sue Decker is leaving that post to oversee the revenue-generating advertising group, a move analysts have interpreted as grooming her for the CEO position.

Sterling said: "This seems to suggest that she is the heir apparent."

Elinor Mills writes for CNET News.com