November 17, 2010, 10:17 AM — By moving into the hot location-based services market, Yahoo hopes to shed its second-tier status and return to its place as a major Internet player.
Yahoo made several moves to reassert itself today at the seventh-annual Web 2.0 Summit in San Francisco. Most notable was its unveiling of a service called Local Offers that it said will give users information about local merchants along with coupons and information on deals at stores in their neighborhoods.
"People have largely written Yahoo off, and it will take a great deal to get them to reverse that opinion," said Rob Enderle, an analyst at Enderle Group. "But this works around where Yahoo was traditionally strong and consistent -- the super portal model that the firm was built around."
Yahoo was an Internet pioneer with its early development of a search engine, an e-mail service and news aggregation tools.
In the search business, Yahoo has joined forces with Microsoft to take on Google . The agreement between the two companies calls for Microsoft's Bing search engine to power the search tools at all Yahoo sites.
Now Sunnyvale, Calif.-based Yahoo is looking for another boost to its business. A well-implemented location-based service could be just what the doctor ordered, said Augie Ray, an analyst at Forrester Research.
"Yahoo doesn't have the luster it once had, but it remains a powerhouse site with significant traffic and users," said Ray. "That said, it has to innovate to stay relevant, and its local strategy is a good innovative step."