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Yahoo's Marissa Mayer: Search is far from over

The Yahoo CEO compared today's state of search to physics in the 1600s. "There's miles to go before you get to quantum physics," she said. But Yahoo doesn't have 250 years to figure out how to master search.

Yahoo CEO Marissa Mayer and CFO Ken Goldman face the cameras during the second-quarter 2013 earnings call. Yahoo's search and display revenue were down from the year-ago quarter.

It's been more than a year since Marissa Mayer took the reins of Yahoo. In an interview with Bloomberg BusinessWeek's Brad Stone, the former Google executive said that "things have gone really well" and a lot of the progress surpassed her expectations.

Things have gone well in terms of hiring more engineers, updating existing products, getting more mobile, and reviving team spirit, but she's making sure the financial community knows that "getting the company growing at a rate we would like to will take several years."

In the last quarter, ending June 30, both display and search advertising revenue were down from the same period the previous year despite reversing the decline in traffic that plagued the company before her arrival. Yahoo's stock is up 75 percent in the Mayer era, but that is largely due to the company's 24 percent stake in Alibaba, the Chinese e-commerce site.

However, Mayer has some plans for getting the company back on track, without having to spend another billion dollars on a startup like Tumblr. In the interview, Mayer talked about hiring 50 Ph.D.s this year to help create technology breakthroughs that could make Yahoo more competitive in areas such as mobile and search.

Mayer, who spent 13 years in the maw of search at Google, thinks Yahoo has a chance for a breakthrough in search that could lead to growth. Search, which can convey a lot about user intent, leading to more dollars per click, is the rocket ship that led Google to $14 billion in revenue for its last quarter. But Yahoo doesn't own a search engine. For now, Yahoo is partnered with Microsoft for search results, which limits the scope of what those Ph.D.s could do to revolutionize search.

Mayer is taking the long view. "Search is far from over," she stated in the interview. "It's physics in the 1600s or biology in the 1800s. There's miles to go before you get to quantum physics or even a microscope. There's a lot of that you can do once you have mobile, and we are going to be very focused on the user experience."

Yahoo mobile search, with Microsoft Bing as the engine. (Credit: CNET screenshot)

Earlier this year, Mayer talked about search innovation and constructing results in different ways. "It's like being a wine maker. You can grow your own grapes or buy them from someone else and still make a wine with your own style," she said.

So far, Yahoo's style isn't totally delighting users. According to ComScore, Yahoo's share in the U.S. is declining.


Most of the innovation in mobile search today is coming from Google and Apple, with conversational interfaces and digital assistants such as Siri and Google Now that respond to natural language input and seek to provide answers from a semantically rich data repository with billions of items of people, places, and things. Microsoft so far hasn't released a conversational search interface and digital assistant for Bing.

"We could come out with something now like them, but it wouldn't be state of the art. It's too constrained to be an agent now," said Bing search director Stefan Weitz. "We are not shipping until we have something more revolutionary than evolutionary."

Without its own search engine, it's hard to image how Yahoo can revolutionize search. The company can try to "inspire and delight users," as Mayer likes to say, with some interface tweaks as it did with Flickr, Mail, and other mobile apps. Yahoo has plenty of user data that it could use to customize the search experience on top of Bing or Google search. Or, perhaps Mayer's search quantum leap will manifest itself with another acquisition, one that escapes Google and Microsoft. Maybe IBM would be willing to share Watson with Yahoo.

As Mayer said, search is far from over. But Yahoo doesn't have 250 years -- the time between Sir Isaac Newton and Einstein -- to figure out how to master search.