Yahoo Shutters Enterprise Unit

Yahoo has discontinued its enterprise software division, which it initially set up to push its messaging and Internet broadcast offerings onto corporate desktops.

The company laid off an undisclosed number of workers at locations in California, Dallas and Atlanta as a result of the division closing. Other workers found new jobs within Yahoo, as some of the enterprise division's responsibilities were parceled off to business units that sell consumer versions of the same products.

For example, Yahoo signaled its intention to continue actively marketing its corporate messaging product, though those efforts will be shifted to the same unit that sells Yahoo IM to consumers. Other enterprise products, including business portal solutions, will be phased out, with no new sales efforts conducted.

IM Ready

If anything, Yahoo is poised to put even more resources behind its IM product for corporations, said Paul Ritter, program manager at the Yankee Group. Last summer, the company announced plans to release a version of the product offering access to WebEx meeting capabilities and collaborative software from BEA Systems.

Ritter told the E-Commerce Times that Yahoo has found market traction with its hosted IM product and has made it clear with recent moves that it believes its product can win its share of battles with rivals AOL and Microsoft (Nasdaq: MSFT). One advantage for Yahoo is that AOL sold its own consumer product to corporations -- until recently.

"Yahoo got some valuable partners in WebEx that gave IM some weight in the corporate environment," Ritter added. On the other hand, enterprises still are searching for the best way to use videoconferencing and streaming video broadcasts, which Yahoo had made a centerpiece of its now-discontinued business portal software products.

Buying and Selling

Attacking the enterprise was a major part of Yahoo's bid to diversify in the face of plunging online ad revenues during 2000 and 2001.

The company's corporate push focused largely on its video broadcast capabilities, which became a hot topic in weeks after September 11, 2001, when business travel came to a standstill and analysts predicted a long-term shift toward remote videoconferencing.

Forming the foundation of Yahoo's efforts was Broadcast.com, the streaming video company it acquired in early 1999 for some US$5.7 billion worth of stock. Yahoo envisioned corporations using its streaming capabilities for everything from employee training to CEO messages to employees.