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Analysts: You Can't Compare Yahoo to Google

On Tuesday, the news hit the wire: Yahoo had finally shaken up its corporate structure. COO Dan Rosensweig was out, CFO Susan Decker moved over, and the search began for a leader who can help Yahoo develop products and keep, engage, and grow its audience.

Almost immediately, industry watchers began calling the shake-up a result of Yahoo's competition with Google.

It's true Yahoo runs a search engine business that competes with Google for searchers and advertising dollars.

And it's true Google regularly trounces Yahoo in the search engine and search marketing business, whether the score is kept by revenue dollars or market share.

But in the wake of Yahoo's shake-up, at least a few contrarians are wondering what the bigger problem for the company is: its competition with Google or the fact that no one seems to understand how little Yahoo's core business competes with Google's core business.

"Part of the problem, which isn't really a problem except that they are a public company, is that they're compared to Google and they're not really in the same business," JupiterKagan analyst David Card told internetnews.com.

Google is a search engine. Yahoo is a portal with a search engine product, Card said.

But it's only one product among many, and, overall, he said, the company is in a "good position."

"They have a big, broad, loyal, general-purpose audience. They can slice and dice that audience up into pieces. They have a rich advertising platform and because they can do search, they can do video and they can do sponsorships, they can deliver different kinds of marketing messages in different kinds of context.

"That's not a bad place to be."

Numbers from Hitwise Market Research confirm Card's assessment. In the market share of visits for the week ending December 2, Yahoo ranked first in business information sites, first in e-mail, second in maps and first in news.

By comparison, Google ranked 21st, fifth, third, and sixth, respectively.

The good news for Yahoo, Forrester Research Analyst Charlene Li wrote on her blog, is that the company's reorganization resulted in a mission statement, "to connect people to their passions, their communities, and the world's knowledge," that de-emphasizes its search competition with Google.

"I really like this because it puts 'people' at the center of Yahoo!'s strategy. Compare this to Google's mission 'to organize the world's information" and you get an idea of each company's battle plan,'" Li wrote.

The people at the center of Yahoo's strategy are its audience, of course, and Card agreed that they are the company's most valuable asset.

It's also one that Google, no matter its growth, isn't really trying to steal.

While Yahoo publishes content on topics ranging from sports to food, Google characterizes itself as a switchboard. A Google spokesperson even confirmed that the company doesn't want or need users to stick around on its site; it wants the users to find relevant search results or sponsored links that lead off the site.

This doesn't mean Yahoo's core business doesn't face competition for that audience. That's coming from Internet properties that have little to do with search, such as MySpace, Facebook, ESPN, MSN or AOL. In other words, it's coming from content producers and platforms whose goals are to keep users around as long as possible, looking at the brand advertising.

In particular, Yahoo should be wary of social networks, Card said.

"The social properties are stealing a lot of the buzz because a lot of marketers are intrigued if not spending a lot of money them yet."

But, despite that challenge, a competition with a bunch of buzz-stealing upstarts remains much different than a competition with Google over search.

Advertising revenue went up 30 percent across the Internet in 2005 so there's plenty of new business to go around. A reorganized and refocused Yahoo should get its share, Card said.

"They're in a good position. If this reorganization helps them make better decisions faster and implement them faster, then they should be in a good shape."