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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Satish C. Shah who wrote (3571)	1/27/1999 8:48:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

AltaVista Deal Adds Twist To Portal Wars Hi Satish: Here is a rather interesting look at the new developments with respect AV and other portals. BTW I confess that I picked up some CPQ the other just so I could possibly get a piece of the AV action.This comment by the company I thought was quite reassuring and hence my move.I hope we hear a bit more details about AV IPO during Friday's CC. "Creating a separate, publicly held company "will unlock AltaVista's tremendous value for Compaq shareholders," Pfeiffer predicted.... ========================= (01/26/99, 6:51 p.m. ET) By Malcolm Maclachlan, TechWeb Inktomi signed a deal with Yahoo in May that unseated AltaVista as the search provider at the Web's leading portal. On Tuesday, AltaVista returned the favor, signing a deal that got Inktomi dumped from Microsoft. Compaq also announced Tuesday that it would spin out AltaVista. The new company, called The AltaVista Co., will seek to go public and to make its way in the competitive portal arena. In addition to licensing its search technology to Microsoft, the AltaVista site will use communications services from Microsoft Network, such as the MSN Hotmail service. AltaVista's independence could signal a new period of competition between the companies, said John Robb, an analyst with Gomez Advisors. For one thing, he said, AltaVista is one of the only companies whose search technology has the capability and credibility to compete with Inktomi. "Inktomi has been pretty successful in dumping AltaVista," Robb said. "Their objective is to wipe out Inktomi." But Inktomi CEO Dave Peterschmidt said he does not fear losing any more customers to AltaVista because AltaVista stands to compete with most of them. Competition was the reason Yahoo split with AltaVista, he said. It would also be an issue with Inktomi search customers such as HotBot, @Home, and GeoCities. AltaVista's search technology is powerful, Peterschmidt said. But while both are Unix-based, he said, AltaVista runs on big SMP machines, while Inktomi runs on networked workstations. This means Inktomi's technology is more scalable, he said, because customers can simply add another workstation. It also offers better price for performance. Further underscoring how "co-opetition" permeates the portal and search arena, Microsoft Network sees the deal as an opportunity to sign up customers for its portal technologies. Marty Toucher, director of network communications at MSN, said that as soon as MSN rolls out services like instant messaging and chat buddy lists, they will be available on AltaVista. Over time, they will develop a network of users across both sites, he said. One thing they will not do, he added, is buy AltaVista or attempt to unite branding across both sites. Rather, he said, it will offer services to portals, ISPs, and others. ISPs and OEMs could also license MSN's entire portal offering. In any case, the spin-out is a good move for AltaVista said Gomez's Robb. "It's a good search engine," Robb said. "It's just been under-managed." Compaq acquired AltaVista with its purchase of Digital Equipment one year ago. Although the management teams at both Compaq and Digital were good with hardware, they were not seasoned media experts, Robb said. Other search engines quickly moved into many different content and services areas, Robb said, but AltaVista wasted time experimenting with failed ventures in areas such as micropayments -- the idea that consumers would pay a few cents at a time to view content. Robb questioned AltaVista's two big moves last week -- it's purchase of Shopping.com for $220 million and its deal to renew its advertising arrangement with DoubleClick. In both cases, he said, it is essentially outsourcing control of areas that it should keep control off. Yahoo, for instance, manages its own advertising and shopping relationships.