Yahoo CEO Carol Bartz may be under the impression that Yahoo has “never been a search company,” but at its “What Matters Most” product update today, search was definitely front and center. One of the demos showed a new, upcoming search homepage.

The new design will focus on making search more personalized, and specifically going after Google in people search . “We’re taking that away from them,” vows Yahoo’s VP of Search Products and Design Larry Cornett. When you type in a person’s name in Yahoo, it will do a better job of bringing up links to their profiles on Facebook, LinkedIn, Twitter, and FriendFeed—something Google already does exceedingly well. But Cornett throws down a challenge for Google: “When we launch this, you’re going to come to Yahoo to search for people.”

Any niche that Yahoo can carve out for itself strengthens its position as it awaits the long approval process surrounding its proposed search deal with Microsoft. After that, Bing will take over its core search results, but it will still focus on the user interface front-end on Yahoo search itself. Already, that is moving in a more Bing-like direction.

Another new feature previewed today was dividing the search page into three columns, with the left-hand column being devoted to filters and different ways to sort and refine your search. Bing, of course, does this already with its related searches in the left hand column. But Yahoo combines this with people search so that along the side are tab-like filters which bring up recent Tweets, Facebook results, Friendfeed comments, Pandora profile information, and more of the person you are trying to find out about.

But people search was a big area Cornett stressed as one where Yahoo thinks it can give Google a run for its money. The problem is that people search is only one type of search. Even if Yahoo does a better job there, it will have to do much more to break consumers of their Google habit.

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