AltaVista Buys Zip2
(02/16/99, 5:18 p.m. ET)
By Malcolm Maclachlan, TechWeb
AltaVista continued its aggressive moves in the
portal arena Tuesday, buying local city guide
company Zip2.
The Mountain View, Calif.-based company works with
newspapers to create sites with news, entertainment
listings, and localized information. Its network of sites
covers most of the major metropolitan areas in the
United States.
The jewels in Zip2's crown are deals with the Chicago
Tribune and The New York Times.
This provides AltaVista with a different approach to the
local content contest, which includes competitors such as
Microsoft's Sidewalk, America Online's Digital City and
CitySearch, an independent company that filed for an
IPO last year.
In contrast to these Internet-only brands, Zip2 said it
expects newspapers to become dominant online brands,
largely because they start with a huge installed base of
readers. Zip2's dominant position with local papers
played a huge role in the decision to pursue the company,
said Ronnie Ward, vice president and general manager of
e-services at AltaVista. Zip2 has sites with 160 papers,
he said, including 23 out of the 30 biggest markets.
According to Zip2 founder Elon Musk, AltaVista's lack
of entanglements was a plus in selling its newspaper
partners on the idea. Before AltaVista came to them,
Zip2 was preparing for an IPO.
"There's not a conflict with AltaVista in the minds of our
media partners as there would be with a Disney-Go
relationship or even a Yahoo relationship," Musk said.
Another factor in the deal, Ward said, is Zip2's software
infrastructure, which will make it easy for new partners
to hook into the network.
"They just have an outstanding platform technology for
local media players," Ward said.
For AltaVista, Zip2 fills in another piece in its portal
puzzle. It sought to address its e-commerce needs last
month when it bought Shopping.com for $220 million.
AltaVista has been known for having a strong search
engine and little else. This changed when Compaq
acquired the company through its purchase of Digital
Equipment a year ago, Ward said. Since the purchase, he
said, the site's traffic has grown by 50 percent and its
revenue by 60 percent.
Late last month, Compaq announced that it would spin
off AltaVista to let it compete more effectively.
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