Why Yet Another Hierarchical Officious Oracle failed?

I have never paid attention to what Yahoo stands for since I opened an email account at the search engine’s server nearly 8 years ago. The recent media coverage on Microsoft’s bid to obtain Yahoo reminded me that the big name in the Internet business might undergo a fundamental change while I still have no idea of its origin. I searched for the meaning of Yahoo by typing ‘Yahoo & stand for’ into the Yahoo search box. It’s an abbreviation of quite complicating, long name - Yet Another Hierarchical Officious Oracle.

Yahoo could have been called "David's and Jerry's Guide to the World Wide Web" – so appropriate, but a bit boring and not exactly catchy. The co-founders used the dictionary to come up with “Yahoo!”, a term that anyone can remember and say with ease. More importantly, Jerry and David said they liked the definition of a yahoo: "rude, unsophisticated, uncouth." In the end, the word Yahoo! did roughly describe it as a web search directory. The term "hierarchical" described how the Yahoo! database was arranged in directory layers. The term "oracle" was intended to mean "source of truth and wisdom". And "officious" described the many office workers who would use the Yahoo! database while surfing from work.

According to an analysis published by Financial Times, at least one of the reasons of its failure in competing against Google has been mentioned in its name – “hierarchical”. Here is a part of the FT article entitled How Yahoo got lost in rival’s shadow.

“Yahoo is a company that grew up when the concept of [the fast pace of development in] internet time came to prevalence,” said Scott Kessler, S&P analyst. “But they have lost their timepiece, because they have not acted or reacted in internet time for many years now.”

Yahoo began as a website in January 1994 called Jerry’s Guide to the World Wide Web, started by Stanford University graduate students Jerry Yang and David Filo in the early days of the medium. Yahoo, as it was renamed in April that year, organised websites in a hierarchy of directories for different subjects. It was a method that was to become outdated with the advent of algorithmic search exemplified by Google. But Yahoo achieved tremendous popularity in those first few years and it was floated in April 1996, raising $34m.

The Silicon Valley company evolved by adding services such as web-based email and instant messaging, and by becoming a web portal. Yahoo has accrued half a billion monthly visitors worldwide from its conglomeration of services, but it has spread itself too thinly in the process.

In the famous “peanut butter manifesto” of November 2006, Brad Garlinghouse, a senior vice-president, wrote an internal memo complaining that Yahoo had spread itself like peanut butter across emerging online opportunities. “The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.”

Yahoo’s lack of focus caused it to fall behind Google in search and in advertising revenues.
It has also missed the social networking wave – its own effort, called Yahoo 360, has been unsuccessful. The company is seen as having made some savvy internet acquisitions, such as the photo service Flickr, bookmark site Delicious and events website Upcoming. But it has been slow to integrate and exploit these as part of its services.

The delayed introduction of its Panama advertising technology contributed to a string of disappointing financial quarters and an ailing stock price. Mr Kessler said: “The company is perceived to have shrunk in the shadow of Google. Quarter after quarter, Yahoo has been disappointing us. It has just not lived up to expectations.”