SAN JOSE, Calif. — Although the hiring of Marissa Mayer as Yahoo Inc.’s new chief executive officer last week was widely praised in Silicon Valley, the choice reignited a long-standing debate over the core business of the once-pioneering but now struggling Internet company.
Admirers of the veteran Google executive say Mayer has the engineering credentials to reinvigorate Yahoo’s embattled work force and develop new technology products to help the company compete with more successful advertising rivals such as Google and Facebook.
But some analysts and industry figures say Yahoo has already lost the technology war and needs a broader business strategy to convince advertisers that it can deliver compelling media content - both news and entertainment- rather than radically new products. Some questioned whether Mayer has the expertise for that job.
Yahoo veteran Ross Levinsohn was making progress on the latter strategy while serving as interim chief executive before Mayer’s surprise appointment was announced last week, some analysts said. But Ben Schachter of Macquarie Securities said Mayer’s hiring is evidence that Yahoo’s board opted instead for a leader who can “bring a fresh, outsider’s view” to the company.
“This is riskier than going with a known entity such as Mr. Levinsohn,” Schachter wrote in a research note, although he added that the choice of Mayer “could be more rewarding.”
In a statement last week announcing Mayer’s hiring, Yahoo Chairman Fred Amoroso and co-founder David Filo both stressed her track record in developing new technology and products at Google, where she is credited with overseeing the design of Google’s main search page as well as other search functions and new products such as Gmail.
That emphasis came as a surprise to many in the industry, given recent indications that Yahoo had planned to build its comeback on new digital content.
Mayer’s selection “means the new Yahoo is going to focus on product innovation,” Marc Andreessen, the legendary Netscape co-founder and Silicon Valley venture capitalist, said in an interview. Mayer has an opportunity to create a more innovative and entrepreneurial culture at Yahoo, he said.
“Marissa Mayer is a great leader and knows the ins and outs of the tech community and the ad community,” added veteran tech investor Ron Conway.
In particular, some industry experts saw Mayer’s hiring as an indication that Yahoo will finally develop new products that take advantage of the growing consumer trends toward mobile computing and social networking.
Karsten Weide, an Internet industry expert with research firm IDC, said it’s even more important that Yahoo focus on developing new advertising technology, as the industry increasingly moves toward using software that automatically sets the price and allocates space to advertising customers.
Mayer’s background at Google should help Yahoo in that effort, added Weide, who said he is concerned that Levinsohn appeared to be de-emphasizing advertising technology. Other analysts added that Mayer’s reputation should help Yahoo attract talented engineers and entrepreneurs.
Critics, however, said Yahoo’s problem is not simply a lack of new products. And several said they are concerned that Mayer lacks experience as a CEO.
“Yahoo’s fundamental problem is that it has too many disparate products with no clear unifying thread that ties them all together,” Forrester analyst Shar VanBoskirk said in a blog post, adding that the company “needs a strategic visionary, not a product engineer.”
Meanwhile, veteran tech entrepreneur Mike Walrath, who sold his digital ad company Right Media to Yahoo in 2007, wrote in his own blog that it’s a mistake for Yahoo to try to compete with Facebook and Google on technology alone.
“Yahoo has been tilting at windmills trying to fight Google for more than 10 years, and the results are clear,” Walrath wrote, adding that “Yahoo’s strength has always been its audience and media assets,” not its technology.
The company was developing new entertainment videos and other content under Levinsohn, who seemed to be making inroads with large advertisers, said Martin Pyykkonen, an Internet analyst with investment firm Wedge Partners. “There seemed to be this building momentum,” he said, and to “cast that aside” would be a mistake.
Mayer was not granting interviews in the days after her appointment, according to a Yahoo representative. But the new CEO told the Financial Times on July 16 that she views the issue of content versus technology as “a nondebate.”
“To me, I really do think that this is about building services that delight end users, and this starts with technology,” she said. “That said, media will continue to be important to Yahoo.”
While she officially started her new job Tuesday, Mayer skipped a conference call with Wall Street analysts during which other Yahoo executives reviewed the company’s second-quarter financial performance. She opted to meet with other executives and staff members instead, Yahoo said.
Information for this article was contributed by Peter Delevett of the San Jose Mercury News.
Business, Pages 19 on 07/23/2012