June 5, 1998
COMPUTER RESELLER NEWS via NewsEdge
Corporation : In a scenario reminiscent of a daytime
talk show, Web search-engine providers are
swapping partners, signing new deals and
cancelling earlier contracts.
Yahoo Inc. recently dumped longtime partner Digital
Equipment Corp.'s AltaVista search engine in favor
of Inktomi Corp. as its underlying search engine.
AltaVista now will be shunted to the bottom of
Yahoo search pages as a link.
Not to be outdone, after the breakup, AltaVista
paired up with Netscape Communications Corp.'s
Netcenter Web site. In fact, Netscape recently took
on several new partners, including Excite Inc.,
Infoseek Corp., LookSmart International Ltd. and
Lycos Inc.
Excite will help Netscape develop channels and sell
ads and will receive 25 percent of Netcenter's traffic
rotation. Netscape will give its own search engine
25 percent of Netcenter's traffic, while the rest of the
partners-including AltaVista-will receive the
remaining 50 percent. Left out of the loop is Yahoo,
which has discontinued its Net guide for Netscape.
And there is more. Inktomi, San Mateo, Calif., is not
just partnering with Yahoo. Wired Digital's HotBot,
CNET's Snap and Microsoft Corp.'s Microsoft
Network also are supplementing their users' queries
with Inktomi's search engine. And LookSmart, San
Francisco, struck deals with AltaVista and San
Francisco-based HotBot, giving users of the two
search engines access to LookSmart's editorially
reviewed search database.
The reason for all this intermingling? Search-engine
companies have struck the slew of partnerships to
drive people to their Web sites, said Chris Charron,
analyst at Forrester Research Inc., Cambridge,
Mass.
"It's incestuous, but it's a way to survive," Charron
said. " Portal [Web sites] need as many
relationships as they can get to generate traffic.
Right now, eyeballs are the currency of the
Internet."
The nine major portal Web sites-the primary place
where Internet users search for data, receive news
and access their Web-based electronic mail-now
receive 15 percent of the traffic but 59 percent of
online advertising dollars, Charron said.
These sites include: America Online Inc., Dulles,
Va.; AltaVista, Maynard, Mass.; Excite, San
Mateo, Calif.; Infoseek, Sunnyvale, Calif.; Lycos,
Waltham, Mass.; Microsoft, Redmond, Wash.;
Netscape, Mountain View, Calif.; Snap, San
Francisco; and Yahoo, Santa Clara, Calif., he said.
In addition to partnering with each other, these sites
work with content providers such as news
organizations and travel agencies, Charron said. On
average, portal vendors work with 15 companies
today; by 2002, the sites expect partnerships with
thousands of companies, he said.
But while Internet advertising is expected to
increase, search-engine companies still struggle to
make money. Only Yahoo and Lycos have turned a
small profit, leading some industry observers to
predict consolidation down to three to five portal
sites within the next 18 months, said Charron.
Consolidation will come in two forms: "old-media"
companies, such as Time Warner Inc., New York,
could buy them out, or Web sites themselves will
merge, he said.
Copyright (c) 1998 CMP Media Inc.
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