New CEO Marissa Mayer faces long-standing strategic questions in reviving an Internet pioneer.
Although her hiring was widely hailed in Silicon Valley, the choice of Marissa Mayer as Yahoo's new CEO last week reignited a long-standing debate over the core business of the once-pioneering, now-struggling Internet company.
Admirers of the veteran Google executive say Mayer has the engineering credentials to reinvigorate Yahoo's embattled workforce 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 that the company 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 CEO before Mayer's surprise appointment, some analysts said. But Ben Schachter of Macquarie Securities said Mayer's hiring is evidence that Yahoo's board opted instead for a CEO 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 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. He said Mayer has an opportunity to create a more innovative and entrepreneurial culture at Yahoo.
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 IDC research, 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.