Though that serves as a table setter for the problems at Yahoo!, I won't get into financials in this article, as that is not my forte. Instead I will focus on what can be done to create a more useful and meaningful Yahoo! for users, one that can keep people on the site and drive them to use their search engine. Remember that Google controls ~50% of the search market share and pay-per-click text ads on search results drive a significant portion of their revenue -- search share is very important to Yahoo!

The killer app on the web is the platform. We've talked about this before on this blog in terms of social networks and AJAX start pages, and software like Google Gears, the Adobe Integrated Runtime, and the Dojo Offline Toolkit that let developers take the web out of their web apps and have added credence to the idea that the platform of the future is the Internet.

Social networking darling Facebook has realized the power of the platform, which is part of the reason for all the hype, so have start pages like Pageflakes and Netvibes, who are building sophisticated (and increasingly more social) web platforms for developers. These platforms are beneficial for users because, like a desktop operating system, they allow people to aggregate the applications they use in one, central, organized location for quick access. For developers, platforms are a central location to launch new applications to the greatest number of people. For these reasons, the platform itself becomes the web's killer app.

One need look no further than this year's hottest gadget, the iPhone to see how beneficial a strong platform can be for a service or product. While Apple didn't provide a platform for developers in the true sense of the word, the number of iPhone-specific web apps that have been developed for the phone grows daily. These applications extend the functionality of the device and add value to users at no cost to Apple. Often, it is third party applications on a platform that attract new users or retain existing ones.

Building a Yahoo! Platform

Yahoo! needs to realize that the web platform is getting more and more important. Google already has, and is building a platform around their start page, iGoogle, by encouraging developers to build "gadgets" specifically for it. For Yahoo!, a platform can unify their services -- which right now are scattered -- and add utility to their page that will keep users there long enough to conduct searches. Yahoo! controls some of the hottest and most useful properties on the web, but has not figured out how to tie them together. They've started to bring some of their acquisitions under the single Yahoo! sign-on umbrella, but that still doesn't bring my del.icio.us links, my Flickr photos and my fantasy sports team management to one central location.

The good news for Yahoo! is that they already have a property just waiting to be turned into a full fledged platform: My Yahoo!

My Yahoo! is one of the oldest and most popular start pages on the Internet (I've used it since 1999), visited by about 50 million people monthly. The path toward a Yahoo! platform begins with My Yahoo!, which has been undergoing a major update via their new beta site. Many of the changes the My Yahoo! beta showcases are good: drag and drop page organization, more customization tools, multiple pages, and the ability to create a module out of any RSS feed are all great features. Yahoo! has also wisely begun to utilize their start page as a way to tie their various services together -- for example, I can add a static module for my del.icio.us bookmarks or my Flickr images. But there is still a lot more they need to do. Below I will outline three things I think they need to do to compete with the other fledgling platforms on the web.

1. An Open API

When it comes to developer APIs, Yahoo! is at the forefront. According to ProgrammableWeb, Yahoo! ties with Google for having the most APIs (25), which is why it boggles my mind that they don't have one for My Yahoo! the way Google does for iGoogle, or Facebook, or Pageflakes, or Netvibes do. Even more amazing, Yahoo! actually already has a widgets API, it's just focused in the wrong direction: on the desktop instead of toward their own web platform.

"The bottom line is, if we expect you to make My Yahoo! your home on the Web, then we need to deliver the content that’s important to your life. Hence we’re working around the clock to add more and more relevant modules to choose from." -- My Yahoo! Team, June 2007

The best way to add more relevant modules is to open the platform to anyone. Why have a team of people adding only "official" modules and working from a limited perspective when you could have thousands of developers doing the work for you for free? Look at the explosion of applications on Facebook's platform as an example of how well this works. Right now there are over 2300 apps on Facebook, created in just the first two full months of the platform, and that is about 500 more than there were 12 days ago.

Sure not all of those apps will be great, and many of them will likely be downright awful. But the chances of adding applications that are useful to your users and will potentially attract new ones greatly increases when you open up your platform. Further, it is now your users, rather than a small team of paid employees, who are deciding which applications are useful to them. Yahoo! could still retain editorial control by approving applications before adding them to the site, or by featuring modules vetted by the editorial staff.

Certainly for a content company like Yahoo!, opening up their platform might seem like giving their competitors a way to leech users away from their own content, but in reality the opposite it a true. It actually means giving users access to competitor content while keeping them on your site, which is a net positive.

2. Richer Applications

Currently most My Yahoo! modules are one-way, meaning that they give you information but you don't really interact with them. I can get my email via a My Yahoo! module, but I can't compose and send or even read a full email without leaving the My Yahoo! page. Some widgets have basic input functions -- like the reference or stock quote widgets -- but query results are still returned on a separate page, rather than inside the widget.

iGoogle's YouTube app can play videos directly in the app.

For My Yahoo! to be taken seriously as a platform and compete with Facebook and iGoogle, they'll need to support richer applications. That means applications that can be interacted with on the page, such as a dictionary app that loads the definition I am after without sending me away from my My Yahoo! page, or a Games application that lets me load a game of Literati right inside my start page, or a Flickr app that lets me upload photos and manage my galleries without actually visiting Flickr.

One of the reasons people get so excited about Facebook and other burgeoning web platforms is that there exists the potential for nearly any sort of application. With the right apps, Facebook could theoretically become a one stop shop for web surfers to consume information and perform tasks. Support for richer applications would put Yahoo! in the mix for creating the web platform that demands the most of your attention.

3. Make the Platform Social

This is probably the last step Yahoo! should take when building their web platform. Richard and I have both talked about turning start pages into social networks (here and here), and this is certainly where I see these companies going. As Richard said, it seems to be almost a natural evolution -- once you have the users, why not allow them to interact? But Yahoo! needs to focus on building out their platform for developers before turning it into a social network.

It's no secret that Yahoo! has long wanted a social network. There was their famous failed attempt to buy Facebook last fall, and they have since been linked with bebo as well. When Yahoo! launched the beta of their new My Yahoo! service last March, they hinted at the prospect of making their start page property more social, so it is possible they already have plans to do so.

I think growing a social network around their platform makes more sense than purchasing one. My Yahoo! already has 50 million users (by December 2006 numbers) -- or a lot more than Facebook. Since we're already using My Yahoo! to tie Yahoo!'s services together and already want it to be the hub for the Yahoo! universe and the web at large, it makes sense to build in a social network, rather than purchase one from the outside and go through the headache of figuring out how to get it integrated.

Conclusion

Certainly the Yahoo! platform won't fix Yahoo! by itself, but I think it should be a major part of their plans going forward. Turning My Yahoo! into an open platform for rich internet applications does two things: 1. it can unify Yahoo!'s services under one umbrella -- something they have long struggled to do, and 2. it adds utility for users and gives them less reason to leave Yahoo!, and the longer people stay on the page, the more likely they are to start using Yahoo! for search.

I think Yahoo! is actually in a better position to create a winning platform than Google is right now. Their start page is already established and has an enormous user base, they have a rich developer culture built around their other APIs and they can seed their platform with some of the best content on the web.

What do you think of my proposed idea to turn My Yahoo! into a platform? Do you use My Yahoo! now? Would you if it was the platform I envision? Would that be a step in the right direction for Yahoo!? Leave your thoughts below.