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Yahoo announces third reorganisation

Online giant to become 'starting point' for web users

Yahoo has announced another reorganisation in a bid to itself around. The ailing search company now plans to centralise its product development operations so it can obtain its goals of being the "starting point" for most web users and a "must buy" for most online advertisers.

The announcement of the cloud computing and data infrastructure group left Gartner analyst Allen Weiner scratching his head and wondering if that means Yahoo plans to enter the market for hosted IT services like Google and Amazon have done.

Asked for clarification about this point, a Yahoo spokeswoman indicated that this is a possibility but didn't offer more details.

This new group will consolidate and extend the company's considerable resources and talent in cloud computing, including Yahoo's ongoing support of the Hadoop open source grid computing project, she said in a statement.

“The resulting next generation cloud computing and data infrastructure at Yahoo will not only power the company's existing and future sites and services, but also any services ultimately extended to customers," she said. "However we are not discussing any such details today."

For Weiner, the most interesting piece of the reorganisation is the creation of a centralised product development group. One of Yahoo's main weaknesses in recent years has been its inability to create and release truly innovative products and services, having instead to rely on acquisitions to fill that internal gap, he said.

"They haven't had a great, formal process for innovating and getting products out," Weiner said.

"Now that they have this (centralised) product group, they better start releasing some pretty damn good products, like the next Twitter or YouTube, products that will get people to say 'Yahoo is back.'"

This problem has been evident in the apparent disconnect between Brickhouse, Yahoo's internal innovation incubator unit, and the commercial product development teams, he said. Brickhouse has come out with some interesting, early stage prototypes that have gotten the thumbs-up from industry experts but that, for some reason, have gotten stuck on the way to a mass release, Weiner said.

"There's been no process to link Brickhouse into a product development and release cycle," he said.

The reorganisation also calls for Prabhakar Raghavan to direct search strategy and Tuoc Luong to act as interim chief of the search product team. David Ku will be in charge of the Advertising Technology Group for search.

The reorganisation will not touch Yahoo's Marketing Products Division, Connected Life and Corporate Marketing groups.

This reorganisation is the latest of several major ones that the company has implemented in the past 18 months or so, and comes at a thorny time, as Yahoo deals with the aftermath of the failed attempt by Microsoft to acquire it.

The three-month pursuit, which ended in early May, has led shareholders to sue the company, saying its directors and managers failed in their fiduciary duty to shareholders by, allegedly, sabotaging Microsoft's acquisition attempt.

Investor Carl Icahn has nominated an alternate slate of candidates to oust Yahoo's current board. In addition, Yahoo has seen many high-profile executives abandon the company in the past two months.

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