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A Yahoo billboard. Credit: peanutian

It’s in vogue to beat up on Yahoo. The company was early to many of the key innovations of the Internet era, but has consistently failed to press its advantage.

Once you get started looking for the misses, the list just goes on and on. Yahoo got its hands on some of the earliest and most significant social startups, such as Del.icio.us, which allowed users to build up personal sets of bookmarks on the Web, and Flickr, a photo sharing service that’s still popular today. It even had a technology in Yahoo Messenger that could have led to an early social network, but it never created a viable one.

In a recent effort to reinvent itself, the company declared an “open strategy” that heralded the launch of a slew of innovative application programming interfaces. Technologies such as Build Your Own Search Service (BOSS) let developers reshape Yahoo’s search results into experiments that could have resulted in interesting niche services that truly challenged Google.

Unfortunately, Yahoo has never known how to throw its resources behind these promising experiements. Though it still has a large audience, its star has steadily faded.

But it’s not all missed opportunities: Yahoo still has the potential for innovation. “They have an embarassment of riches from a talent perspective, an incredible patent portfolio, and innovative concepts that, while not fully delivered in the marketplace, still point in interesting directions,” says Gary Flake, who founded Yahoo’s research labs before moving on in 2006 to Microsoft, and later to a startup.

Yahoo is still doing strong research. TR just honored Yahoo’s Judd Antin for his efforts to understand what drives online collaboration. Meanwhile, David Pennock continues to do interesting work in “algorithmic economics,” a field that attempts to quantify user behavior and monetization.

The company also has patents on search technologies—including approaches to search advertising—that aren’t being used by anyone else.

And Yahoo has retained a bit of the strength and energy that its application programming interface drive brought to it. For example, the ability to program custom applications on top of Yahoo Mail still offers the opportunity to reach a large audience. The same goes for the Yahoo Application Platform, which gives developers the chance to deploy applications on the Yahoo home page and other popular Yahoo properties. Pipes, a highly praised tool that makes it easy to create mashups, is still being actively supported.

That said, Yahoo’s energy seems to be at an all-time low. A tour of past TR35 honorees from Yahoo reveals that many have since moved on to other projects, including Vik Singh, creator of the BOSS application interface mentioned above; Rasmus Lerdorf, inventor of the influential server-side programming language PHP; Stewart Butterfield, creator of Flickr; and Joshua Schachter, creater of Del.icio.us.

To really make use of the resources it has left, Yahoo needs to commit to supporting the innovations it has acquired and developed much more than it has in the past.

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Tagged: Web, social networks, innovation, Yahoo, business models, business strategy

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