graphic
News > Technology
Yahoo! looks to broadband
August 3, 1999: 3:41 p.m. ET

Like other Net companies, leading portal seeks strategy for the next level
By Staff Writer Randall J. Schultz
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - Whether or not Yahoo! Inc. is purchasing Excite@Home Corp., it will probably need a partner specializing in Internet access -- particularly broadband access -- if it wants to offer more content to its users.
     Word hit Wall Street Tuesday that Yahoo! might be interested in a merger with Excite@Home after a Business Week Online article detailed such a purchase.
     However, Excite@Home President George Bell denied the company was in talks with Yahoo!, while Yahoo! said its policy was not to comment on rumors.
     Bell did say, however, that his company has been in talks with firms such as Yahoo! and America Online, among others, about offering links to their sites on the start-up page Excite@Home's users see first.
     If Yahoo (YHOO) doesn't link up with Excite@Home (ATHM), it could find itself looking for another partner that can give it a high-speed pipeline to offer more interactive content.
    

     Before its merger earlier this year with Excite, a search engine-portal concern, @Home was a stand-alone provider of high-speed Internet access over cable lines.
     Broadband, an industry term for content that is more interactive and vibrant than the Web pages with which most users are familiar, is expected to become a key part of the growth of the Internet.
     However, it requires sending more data -- and phone lines, through which most people obtain Internet access, can't handle the load.
     But cable-based access has proven to be better at delivering the goods. And since many people are already hooked up to cable TV, much of the home infrastructure is already in place.
     "The advantage (of such a deal) would be good for Yahoo! because they don't have a broadband strategy right now," according to Dalton Chandler, Internet analyst at Needham & Co.
     In addition, a deal with another portal site like Excite's would offer it more registered users, the kind who keep coming back.
     In today's "bigger is better" portal marketplace, having those registered users is key to revenue, since portals can guarantee return visitors to advertisers and sell them products through their electronic commerce services.
    
Broadband strategy elusive

     Before Yahoo! can move into broadband, it will have to develop a viable strategy for using its advantages. It is this lack of a clearly defined strategy that has dogged the company, analysts say, as investors look to Yahoo!'s future.
     Certainly, Yahoo! is not the only company to receive such criticism. America Online (AOL) has gotten its share of brickbats about its own grasp of how broadband will fit within its framework.
    

     However, the pressure on Yahoo! to develop such a strategy is less strong than that on AOL, which is a proprietary service, according to Jill Frankl, Internet analyst at International Data Corporation, a technology research firm.
     This is because AOL is inseparable from the way it is accessed, charging subscriber access fees and making revenue from advertising based on its user numbers.
     "Yahoo! is a free Web site, so if people have high-speed Internet access to get to it, it really doesn't affect Yahoo!'s bottom line," said Frankl.
     To be fair, Yahoo! has made some moves to position itself in the broadband area. Most notably, it acquired Broadcast.com, the top Internet audio and video broadcaster, for $5.7 billion in April. A deal with a high-speed access firm could be enough to put it over the top.
     "If they could get people to use their e-mail services, shop on their e-commerce section, (and) watch their Broadcast.com offerings, Yahoo! has a lot of the pieces to be a major media company," Frankl said.
     "It could go head-to-head with AOL and possibly leapfrog over it."
     Even if Yahoo! does come up with a broadband strategy, it might not matter anytime soon, according to Dawn Simon, technology analyst at Brown Brothers Harriman.
     "The technology is still developing and there's no reason to establish an alliance immediately," she said.
     No one really knows what the broadband access scene of the future will look like, so some companies are trying to position themselves with today's model in mind.
     Such alliances as the one between Excite and @Home seemed pushed by events -- especially since cable companies are a finite commodity and it may seem like it's best to hook up with them now, before some other company does.
     However, said Simon, broadband access could become as ubiquitous as telephone lines, lessening the need to rely on a cable firm to get a company's Net offerings into the home.
     Moreover, Simon could foresee a situation where Yahoo! spreads its broadband access business around to several firms, rather than having one large partner handle all of its load.
     And before Yahoo! hooked up with a U.S. high-speed access firm, the company could experiment in smaller markets, possibly overseas, before making any multi-billion dollar commitments to an access firm stateside.
     In the end, companies such as Yahoo! may not even have much say in the way broadband turns out, regardless of any finely detailed strategies they may have now.
     "Broadband is as important to Yahoo! as it is to the consumers," said Simon. "If the consumer demands that type of content, companies like Yahoo! will follow in developing it."
     Yahoo! stock fell 5-7/8 to 126-7/16 in Tuesday afternoon trading. Excite@Home rose 1/4 to 43-3/16 after erasing earlier gains to as much as 49.Back to top

  RELATED SITES

Yahoo

Excite


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.