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Yahoo's New Core Competency Seems to Be Outsourcing to Others

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Yahoo (s yhoo) CEO Carol Bartz, after more than a year of looking at the company’s operations, seems to have settled on a new business model — namely, outsourcing various parts of its sprawling web empire to other companies. Today saw two similar announcements: one has online dating site taking over Yahoo’s personal classifieds service, and the second has mobile giant Nokia (s nok) assuming command of a joint venture involving the web company’s mobile email, chat and mapping services. In similar moves made earlier this year, Yahoo merged much of the operation of its health site with Healthline Networks and management of its online shopping service was effectively handed over to PriceGrabber.

In the pairing — the value of which wasn’t disclosed by the companies — users of Yahoo’s personals site will gradually be transitioned to something called “ on Yahoo.” The web service had been expected by some to sell the personals business outright, with analysts giving the unit an estimated value of $500 million. In the Nokia deal, meanwhile, the Finland-based mobile handset company will provide its mobile mapping technology for use in all of Yahoo’s services, while Yahoo’s email and chat will become the engine behind Nokia’s new Ovi email and chat features.

On the one hand, outsourcing and partnering with others around some of its business units makes sense for Yahoo, where Bartz has been trying hard to rationalize its sprawling empire by cutting costs and improving its return on investment. At the same time, however, many of these deals seem to fall into the category of “too little, too late,” as Kevin noted in his analysis of the Nokia deal. Like the company’s most substantial outsourcing attempt of all — the multibillion-dollar deal with Microsoft (s msft) to partner on search — they seem to be an admission that Yahoo has failed to make much of these businesses on its own, and is satisfied to simply take a small share of someone else’s business in return.

So if it’s no longer interested in trying to dominate search (at least, not by itself), and it doesn’t want to own mobile in a major way, or be a controlling force in many of the things it used to want to do online (shopping, dating, health, etc.), then what does Yahoo want to do? It seems that the company has its heart set on doing the same thing that AOL (s aol) — another former web star that has seen better days — wants to do: become a major media company. Yahoo, which has been hiring dozens of high-profile journalists to write for its expanding blog network and just bought a content company called Associated Content for $100 million, says it is now “the world’s largest media company” and is betting its future on that status.

That may be an ambitious goal, but at least the company seems to know what it wants to be when it grows up, which is a start — although Bartz seemed less than precise about it in her interview with Mike Arrington at TechCrunch’s Disrupt conference, in which she answered the question “What is Yahoo?” by saying it’s a “great company that is very, very strong in content for its users…it’s a place where you can just get it together.” What Bartz needs to do now is to find a way to put some meat on those bones, and to do that she’s going to need more than just a talent for using expletives.

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Post and thumbnail photos courtesy of Flickr user Yodel Anecdotal

12 Responses to “Yahoo's New Core Competency Seems to Be Outsourcing to Others”

  1. Carol Bartz’s words say it all: “Yahoo does a lot of things.” Translation: We’re not focused. We want to be all things to everyone, but we’re unsure of what we really want to be. Umm, I take that back. We really just want to be a big company and are hard at work convincing our critics on the web that they should give us due respect. Everyone should love us; eventually people will when they realise what a cool company we are. Great things are in our future, but I can’t really explain what. Regardless, they’ll be cool.

  2. Laura

    Yahoo may become a media company, but it will resemble the National Enquirer more than Time Warner. The quality of the content that its writers produce now is abysmal and is not likely to improve.

  3. yangyang

    This was such a disappointing interview. It’s so clear that she does not have a vision for Yahoo and that she doesn’t know how to build something great from scratch, like a new product or new business or to move into new emerging markets in the fast changing Internet space.

    She was all over the board in here description of Yahoo.

  4. jimjerky

    Are the Yahoo board members sleeping, or do they pay attention to their CEO’s public pronouncements?

    No offense to Ms. Bartz but she really seems like a fish out of water when it comes to talking about “what Yahoo does”.

    What’s weird is that she made soooo much money last year. She is not impressive on the subject of the web.