As Yahoo languished in recent years, new online services squarely in Yahoo's back yard, such as Facebook and Twitter, had time to put down serious roots. And of course Google has encroached, too: its search-ad revenue has funded any number of affronts to Yahoo, including Gmail, Google Docs, Google News, Google Finance, Orkut, and Blogger.

Of course, Yahoo believes that its clout on the Internet will give it the necessary leg up. So the next start-up, for example, could get traction quickly by drafting off Yahoo's page views and user base.

Yahoo CTO Ari Balogh
Yahoo CTO Ari Balogh
Stephen Shankland/CNET News
"Yahoo allows developers to create applications for the world's biggest audience," Patel said. "And they're able to do monetization for advertising. Those two are huge value propositions."

The company is betting the money will come its way, too. Yahoo expects to gain better insight into what users are doing, and consequently better predict what sorts of content or