Yahoo launches search tool like one Google killed

SAN FRANCISCO Wed Feb 4, 2009 1:10pm EST

A Yahoo! sign in New York's Times Square, November 18, 2008. REUTERS/Brendan McDermid

A Yahoo! sign in New York's Times Square, November 18, 2008.

Credit: Reuters/Brendan McDermid

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SAN FRANCISCO (Reuters) - Yahoo Inc is panning for gold in waters that Google Inc abandoned.

Yahoo said in a blog post on Wednesday that it was testing a new tool to help people better organize the bounty of information that crops up while doing research on the Web.

Search Pad is similar in concept to Google Notebook -- a product the Web-search leader opted to halt development on last month.

But the fact that Google threw in the towel on a product does not mean Yahoo is wasting its time, say some analysts. The companies' differing financial and competitive positions mean what is right for one might not make sense for the other.

Google, which controls roughly 63 percent of the U.S. search market, is taking a hard look at its operating expenses to preserve its operating margin in a slowing economy, including the slew of non-essential projects it traditionally supported.

Yahoo, whose 2008 revenue rose 3 percent to $7.2 billion, is in dire need of a new growth strategy, say analysts.

Investors might be more tolerant of projects that pressure profit margins at Yahoo if there is a chance of a payoff, said Sandeep Aggarwal an analyst at Collins Stewart, speaking in general terms and not of Search Pad specifically.

"Yahoo cannot give up on other projects," he said.

Yahoo, which recently hired Carol Bartz as chief executive to revive its fortunes, is in a "transformation phase" after turning down a $47.5 billion buyout offer from Microsoft Corp last year and seeing a search advertising partnership with Google fall apart under antitrust scrutiny.

Search Pad predates Bartz's arrival, said Yahoo Search Senior Director of Product Management Tom Chi.

It stems from a realization that Web surfers use search engines not just to find the link to a particular site, but to conduct research on everything from buying a new car to learning about a medical condition.

The product detects when a person appears to be doing research on a specific topic and offers to catalog the findings in a special window within the Yahoo search page.

A person can use Search Pad to clip a portion of a website, such as a book review on Amazon.com Inc, add notes to various clippings and save the results as part of their online profile.

Yahoo will begin offering Search Pad to a limited set of Web surfers on Wednesday.

Google continues to support Notebook for existing users but no longer updates the product with new features and will not allow new users to sign up for the service.

According to Pacific Crest Securities analyst Steve Weinstein, Yahoo's best prospect for taking market share in the search business is increasingly about the user experience.

"As it stands right now, no one would shift from using Google, or any other site, just because (a different search engine is) one basis point more relevant," said Weinstein, who has a "sector perform" rating on Yahoo and whose firm makes a market in Yahoo shares.

"They really need to find some kind of experience that will make people think Yahoo is unique," he said.

(Reporting by Alexei Oreskovic; Editing by Tim Dobbyn)

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