Why Yahoo plays well in Peoria ??

Yahoo's Blake Irving continues to insist that Yahoo is a technology company as if there were something bad about being seen otherwise.

(Credit: Tom Krazit/CNET)

SUNNYVALE, Calif.--In the men's room outside the media briefing room here at Yahoo's headquarters, there's a dual sink with mismatched faucets: one modern hands-free sensor-activated model and a more traditional hand-operated one. It's a fitting metaphor for a company that, even when it moves in new directions, never quite manages to let go of the old.

Yahoo is a massive media company, the biggest and arguably most successful content provider among media companies to have made a name exclusively on the Internet. It also has a rich history of technology innovation, developing one of the most-popular search engines during the rise of the Internet and delivering e-mail and instant messages to hundreds of millions of people around the world.

And yet it's one of the most insecure organizations in Silicon Valley, scarred by the chaos and blunders of the Terry Semel/Jerry Yang era. Yahoo practically begged the tech media yesterday to see it as a source of technology innovation (while blaming "misperceptions" of the company on, of course, the media) during a "vision" briefing that many in the room seemed to have heard three or four times in the past.

Granted, new Chief Product Officer Blake Irving wasn't around during those years, and could therefore declare with a straight face during the event that "this is an amazing technology company in the media business," which is perhaps the most succinct answer a company executive has delivered to an existential question about Yahoo in years.

But the fact that Irving and other Yahoo executives feel they have to repeat over and over again that Yahoo is a technology company just shows how desperate a large part of Yahoo is to be seen as part of the "new" technology industry, the one that brings you things like iPads and phone calls from within your e-mail and real-time communication.

Yahoo has brilliant engineers. It has talented business people. It has some excellent products. But it is in no way, shape, or form setting the agenda for the technology industry in the 21st century. And as every Yahoo employee with stock options knows, investors feel much the same way.

If Yahoo is a technology company, it is Middle America's technology company. Yahoo CEO Carol Bartz often scoffs at the disdain for her company among the self-professed technology elite on both coasts of the U.S., saying that when she travels to other parts of the country and around the world, people know and love Yahoo and don't hesitate to tell her how much they enjoy using the company's products.

Those people, as nice and smart as they may be, are not the ones who set the technology agenda. A former executive once sighed when I asked him how Yahoo deals with that kind of inertia: it's not that Yahoo is unimaginative when it comes to technology innovation, but much of its product development is hamstrung by the need to make sure its huge audience feels comfortable on its pages.

This is absolutely not a bad thing in the abstract. Huge, stable audiences attract money, and many on the Internet would kill for Yahoo's advertiser-friendly user base. But companies that want to be considered true technology innovators cannot fear change. They must embrace it.

Apple doesn't worry what its users think if it realizes it needs to eliminate a widely used monitor port technology to make a sexier and more capable laptop, it just does it. Google doesn't worry what its users will think when it introduces something like instant search, it just gives them an easy way to turn it off. When you have the confidence to take those kinds of risks, you can make those kinds of breakthroughs.

Yahoo's tech product-development line certainly isn't stale: Greg Sterling of Search Engine Land, for one, thought quite highly of Yahoo's new Mail and search interfaces demonstrated following Irving's presentation. But should any of those advances prove popular with the public, they'll highlight one of Yahoo's core problem competing as a technology company: competitors can duplicate those advances rather quickly unless they are truly a cut above what anyone else is doing.

Yahoo's new design for Yahoo Mail, rolling out as an opt-in beta over the next several months.

(Credit: Yahoo)

True technology companies don't have to tell the world they are technology companies. Anyone doing business on the Internet at Yahoo's scale is by definition a technology company no matter what they really do: the complexity of serving personalized content and ads, and ensuring reliable service for nearly 300 million e-mail users is no small feat of technology. But you don't hear Amazon insisting people call it a technology company even though it has an amazing array of technology; it's content with being known as the best and biggest online store.

Yahoo is cursed by its history and its geography. If Yahoo was based in Los Angeles or New York, it might be seen perhaps as the most tech-savvy media company in the business. Likewise, Amazon, based in Seattle, may fly under the Valley gossip radar but is quite secure in its own technulinity, a word I totally just made up.

However, Yahoo resides in Silicon Valley, a place where tech trends go out of date at an astonishing rate, 35-year-old people are too old to understand the way things are today, and media companies are seen as the ones standing in the way of true innovation that might disrupt their established business interests.

There's a sizable portion of the tech elite throughout the entire country who simply moved on once it became clear several years ago Yahoo was failing to keep up with the rate of change in search, e-mail, and social media. If Yahoo really wants to consider itself a true technology innovator, it needs to make the kinds of tech breakthroughs that make it a must-have among the trendsetters without upsetting its user base.

That may be too hard. Which makes it puzzling to understand why, time after time, Yahoo sets itself up for comparisons against the true technology agenda-setters of the world, a comparison in which it does not come out favorably.

Would it really be so bad to build a new legacy as the most innovative news, entertainment, sports, and lifestyle content company on the Internet, one that in addition happens to offer reliable and compelling Web services? Yahoo is in a very interesting position as overall media consumption shifts from offline to online; why does it continue to fight the battles of 2004?

Irving declared himself a golfer during Thursday's presentation. If so, maybe it's time to concede the tech industry's gimme putt and move on to the next hole. Otherwise, that next drive better go 350 yards down the middle of the fairway.