Yahoo’s redesign: Will it keep users down on the farm? is perched atop a dangerous peak. Today it is huge, attracting 26% of all global Internet users. But Yahoo traffic is sliding according to Alexa and Quantcast, down 1.6% in the past 3 months and about 10% in the past 2 years — evidence of the movement of consumers away from single site portals to the long tail of web sites, blogs, social media and mobile.

So Yahoo is trying to get stickier. It’s about to relaunch with pop-up-style windows allowing you to update social networks such as Facebook or MySpace while still within Yahoo. Analyst Jeremiah Owyang and WSJ reporter Kara Swisher agree the inclusion of social media is a needed improvement.

Please kids, keep the party at home?

So why should a site with 120 million monthly visitors worry? Yahoo itself notes in its most recent annual report that mobile and social media fragmentation threaten any portal:

“The number of individuals who access the Internet through devices other than a PC, such as mobile telephones, personal digital assistants, smart phones, hand held computers, televisions, and set-top box devices, has increased dramatically, and the trend is likely to continue. Our services were originally designed for rich, graphical environments such as those available on the desktop and PC. The lower resolution, functionality, and memory associated with alternative devices currently available may make the use of our services through such devices difficult, and the versions of our services developed for these devices may not be compelling to users, manufacturers, or distributors of alternative devices…”

The Yahoo redesign could work. The fastest growing segments in social media are now adults 35+, a more conservative group that might be happy playing inside a Yahoo’d-everything portal. Since wealth is accumulated with age, this is not unattractive for advertisers. The relaunch will certainly boost ad revenue in the near term via banners next to the new pop-ups for Facebook and MySpace (social media users tend to refresh often; think of all those CPMs sucking in advertising cash).

Still, the portal strategy is growing outdated. There are nearly 4 billion people with cell phones now, and as those phones get smarter with hundreds of apps, new doorways online will continue to open. The Yahoo response feels a bit like inviting your teenage children to hold a party in your basement; they may spend more time at home now, but eventually the kids will move out.

(All Things D shares the history of Yahoo design evolution here.)

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