Yahoo CEO Jerry Yang cracks a couple jokes and demos Yahoo's new plans at CES 2008 in Las Vegas.  (Source: Paul Sakuma/Associated Press)
Yahoo reaches a crossroads in its development; feels change is need to keep its competitors at bay

Some may not realize it, but Yahoo and is the most visited property on the web, with 136 million unique hits in November.  However, the firm struggles to deal with a lower profile image overshadowed by the business flash of companies like Google and Microsoft.

Google in 2007 managed to narrow the gap from 22 million to a mere 5 million, bringing the race for online dominance into a virtual dead heat.  Yahoo continues to grow, but Google is simply growing at a much faster pace.

To stave off these hungry competitors, Yahoo planned some major changes, according to CEO Jerry Yang, who delivered a keynote address at CES '08 last week.  Yang cracked a bit of a joke to start off the presentation, stating, "I’m guessing that a lot of you are here today to see what the new look and new face of Yahoo is all about.  Well, I’m sorry to disappoint you. It’s still the same old face. I’ve been around since the beginning."

From there on out Yang was all business, detailing how Yahoo will gamble on significant changes to reinvigorate its traffic and growth.  Yahoo showcased its new email hub that ties to social networks, so users can receive and prioritize messages.  It includes many new features, including the ability to tie into external third party applications; a la Facebook.

Yang feels that Yahoo Mail is Yahoo's most public face and needs to be at its best in order for the company to succeed.

Analysts are skeptical, though, whether the updated version of the mail system will have any major impact and whether Yahoo can avoid slipping.  One analyst, Mark Mahaney with Citigroup, remarked, "Maybe it’s too generous, but I would give them six to nine months to prove that these initiatives are having an impact.  It would have been unimaginable five years ago to think that Yahoo’s total audience would decline.  It is not unimaginable now."

Further the software platform to tie in third party remains months away by most estimations.

Meanwhile Yahoo is working to trim its excess and is cutting, combining, or otherwise eliminating Yahoo Photos, premium music, auctions and Yahoo 360, Yahoo's rather unpopular social networking site.  These sites experienced disappointing traffic in 2007, and now are going to be on the chopping block, as Yahoo tries to adopt a more practical "do what works" philosophy.

In a move that seems like common sense Yahoo, will also put more news and content on its front page based on the statistics on user searches.  For example if millions of users are looking up CES in June, even though one might not expect this, Yahoo will try to identify it and provide coverage on its main page.  Yang thinks this will attract significantly more followers to the homepage.

Slightly more surprising is Yahoo's choice to replace some of its links on its prime homepage real estate with links to popular external sites.  Yahoo's business and market research teams think that despite losing the extra traffic of self-redirecting, there will be a greater increase in total use because users will find the homepage's varied featured coverage more interesting.

Criticism and pressures are high for Yahoo and all eyes remain on what it can deliver on in 2008.

"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki
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