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struggle as a portal
Shakeout of me-toos in an era of mega brands
By Marty Beard
The long-predicted shakeout in internet portals is now in full swing, and as evidence one need look no further than AltaVista.
Once among the most-visited sites on the web—and at six years old, one of the oldest search sites around—AltaVista is rapidly slipping from sight, a victim of its inability to establish a unique brand in a field increasingly dominated by mega-brands such as AOL and Yahoo.
"AltaVista is one of these wonderful old brands on the internet that has been desperately searching for its position over the past few years, trying to make a run at being a portal and frankly, failing dismally at it, because that portal race is pretty much over," says Forrester Research analyst Charlene Li.
AltaVista’s traffic is plummeting. Last month the site suffered a 12.3 percent loss of traffic compared to the average of the previous three months, according to Jupiter Media Metrix figures.
Traffic to the site slumped 83 percent from December 2000 to April 2001, according to data from comScore.
The last time AltaVista cracked the Nielsen Net//Ratings list of top-25 properties was the week ending May 6, 2001. A year before that, the site was consistently among the top-10.
AltaVista translates roughly from Spanish as "tall view" or "high view."
What has pushed AltaVista from its high vantage is its inability to offer services that would distinguish it from other portals.
Industry observers have long predicted that the marketplace could not sustain numerous portal sites.
In a 1999 report, Forrester Research predicted that traffic on the web would flow in just two directions—to horizontal portals like Yahoo, MSN and America Online and to vertical sites targeted toward specific niches.
Portals that don’t happen to have the backing of Microsoft—like MSN—or that don’t happen to double as the country’s largest internet service provider—like AOL—were doomed, the report concluded.
And to some extent, that’s proven true. Excite’s owner, Excite@Home, has indicated that it will abandon the Excite portal to focus upon its broadband internet access business. Lycos is still standing, but perhaps only because it merged with Spanish telecommunications company Terra.
"The portal race has been over for a long time," Li says. "Big is not only not beautiful, it's darn expensive and unacceptable in today's investment climate."
Li says that there hasn't been room for AltaVista for the past two years.
"AOL, Yahoo and MSN were already starting to pull away from the rest of the pack back in 1999," she says.
Although it has taken such measures as eliminating its chat rooms and message boards in order to scale back and function as more of a search site, AltaVista is scarcely distinguishable from other web sites of its ilk, such as Lycos, LookSmart and Yahoo.
AltaVista’s offerings include its Babelfish foreign language translator, online shopping, yellow pages, a Yahoo-like directory service, and its original search engine.
AltaVista has gone through several owners, all of which have tried to expand its mission. Its creator, Digital Equipment Corporation, created a simple search site for navigating the then nascent net.
DEC got swallowed up by computer giant Compaq in 1998. Under Compaq, AltaVista was retooled into a general-interest search site that licensed AskJeeves’ plain-English search-query format.
Then in 1999 CMGI, a company that incubates and invests in internet companies, bought AltaVista. Today, it owns roughly 80 percent of AltaVista.
CMGI had its eye on the spots occupied by MSN, AOL and Yahoo—and an AltaVista makeover on its mind. AltaVista was revamped into a directory site and began offering services such as free internet access, free email, headline aggregation and chat rooms.
Suddenly, it was April 2000, and internet companies lost their luster as the economy slowed down. Slowing ad sales bit deeply into AltaVista’s bottom line, forcing it to fire a quarter of its workforce and ditch its free net access service. It also had to sell off Raging Bull, the financial discussion site it had acquired.
AltaVista’s CEO, Rod Schrock, stepped down in October 2000, ostensibly to spend more time with his family.
"The attempts by Rod Schrock to turn the company into a broad-based portal were a disaster," Li says. "The time was past for consumers and marketers to accept another portal with no clear differentiation."
The company twice filed plans to go public. The first time was in 1997; the second time, this year. The IPO hasn’t happened yet.
These days, AltaVista is more of a search site, but since it’s not much different from the competition, what good is it?
Li asserts that the only thing that could save AltaVista would be figuring out what it’s good for—picking a niche and sticking with it.
"The only viable strategy for former portal wannabes is to define and clearly own a niche," she says.
One example of a site that has successfully stuck with a niche is Google. Google was launched in 1999 as a search site and is receiving a lot of traffic without expanding into a portal.
Forrester’s December 1999 report on the state of the portal asserts that AltaVista should "exploit its search pedigree and focus on academic and business research."
Today, Li opines that the company should blend its Shopping.com property with its search technology to become the leading provider of shopping search technology.
"AltaVista should use its remaining cash to focus on its roots of being a great technology provider and create the ultimate shopping search engine that it can then license to sites that already aggregate consumers--like AOL, Yahoo and MSN," Li says.
AltaVista did not return Media Life calls inquiring as to the company’s plans.
June 27, 2001 © 2001 Media Life
-Marty Beard is a staff writer for Media Life.
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