Smart. Very smart. Good move Yahoo!: Yahoo Buys Maker of ‘Widget’ Applications – Yahoo! News:

Hoping to pave a new path to its popular Web site, Yahoo Inc. (Nasdaq:YHOO – news) has acquired Konfabulator, a tiny software maker that provides a computer platform for monitoring the weather, stock prices and a wealth of other customized information without opening a Web browser.

The deal, finalized late last week for an undisclosed price, gives Yahoo access to a toolbox of mini-applications — known as widgets — that have built a cult following since Palo Alto-based Konfabulator first introduced them for Apple Computer Inc.’s Macintosh in 2002.

Apple liked the concept so much that it includes a widgets dashboard in the Mac’s operating system. With just three employees, Konfabulator designs its widget software to run on the ubiquitous Windows operating system as well.

…To help popularize the widgets, Yahoo plans will give away the Konfabulator software that empowers the applications. Konfabulator had been charging $20 for the software. Anyone who bought version 2.0 of the software since mid-May will be given refunds, said Konfabulator CEO Arlo Rose.

Yahoo can afford to be generous, having made $755 million in its most recent quarter, including a $563 million profit from selling its remaining stake in Google.

The Sunnyvale-based company still expects to make money from Konfabulator.

Yahoo is counting on the widgets to make users more curious about certain topics, services or events, ultimately driving more traffic to its Web site so it can serve up more moneymaking ads and expand its current base of 10.1 million subscribers who pay for premium services, Schneider said.

Konfabulator’s widgets can be programmed to perform a wide variety of tasks. The most popular applications are local weather and stock quotes, Rose said, but third-party developers have developed thousands of other uses.

For instance, there are widgets that monitor the local traffic or show the remaining power left on a laptop computer’s battery. Other more whimsical widgets serve up comic strips and horoscopes.

The Yahoo deal “gives us whole new buckets of content to grab stuff from.” Rose said.

More:

Om Malik’s Broadband Blog: “Yahoo will keep the app as a free product, and apparently Yahoo will refunding people who purchased it in the last couple of months). Pixoria was just 3 guys – Arlo Rose, Perry Clarke and Ed Voas. This will clearly be a way for Yahoo to spread its API (OpenYahoo) into various desktop applications. Apparently the deal closed last Tuesday”

Paid Content: “The company had built a cult following since it first introduced these “widgets” (geek-speak for these customizable dektop apps) for Apple’s Mac in 2002. Apple liked the concept so much that it includes a widgets dashboard in the Mac’s operating system.
The widgets are designed to make it easy for outsiders to develop and share new applications – a concept that Yahoo wants to encourage as it experiments with new ways to make the wealth of information on its site more useful, the rationale goes.”

Slashdot: “The reason they purchased Konfabulator was they wanted an easy way to open up its APIs to the developer community and allow them easy access to the information on the Yahoo web site.”

Roland Tanglao’s Weblog: “Awesome! Go Yahoo! go!”

Jeff Jarvis: “I think it’s part of feedthink. The difference is that widgets are dynamic; they get current information; they gets feeds…Widgets should be available anywhere, anytime, on any device…Widgets should also be collaborative…It’s all part of feedthink. Yahoo taking this over means that it could do both those things to widgets. We’ll see.”

Yahoo! has already launched widgets.yahoo.com.