Portal Plays Soothe Pain of Divorce

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Portal Plays Soothe Pain of Divorce
D. Geller - July 18, 2000

Event Summary

The big news was Yahoo's sudden divorce of Inktomi for younger rival Google. Inktomi has been the search engine powering Yahoo's off-directory searches since the beginning of Internet time. Both Inktomi's pride and its stock price were wounded, but the company says that the implications for its long-term financial picture are mild.

One reason for Inktomi's optimism is that Yahoo has invited it to power the searches in a newly announced corporate portal venture. Corporate Yahoo takes Yahoo and partner Tibco Service behind the corporate firewall with a fee-based product that will present corporate information in combination with selected feeds of Yahoo's currently available content such as weather, news and stock quotes.

The logic motivating Yahoo's entry into the portal space seems to be that employees won't visit a corporate portal for the corporate information they need to do their jobs without access to a wide range of the services that are otherwise available for free elsewhere on the Internet.

Inktomi also has a foot in the portal pie. The company recently announced that it would build and donate a public portal that connects to all of the information that individual U.S. government agencies have put online. The portal, dubbed "firstgov.gov," is expected to save the government $20 million in development costs.

Market Impact

Call us cynical, but we don't believe that Yahoo's main motivation here is to rack up profits from building corporate portals. There are a number of software companies and systems integrators already in that business, and it's a rare corporate portal that doesn't offer some of the kinds of information content that Yahoo is offering. Despite Yahoo's name and backing, we don't see this announcement as representing a transformation of the corporate portal market.

A steady stream of revenues from providing its otherwise free services will be a nice enhancer to Yahoo's bottom line. But we do wonder what else Yahoo has up its sleeve. Studies continue to show that employees spend a large amount of time surfing, and not merely for sanctioned, job related purposes. Can Yahoo make money by capitalizing on this almost captive audience?

Few corporations will want advertising by others - Yahoo's main source of income - to appear on their own intranet. Yahoo may be looking forward to mining revenues from various kinds of affiliate and profit sharing schemes, but that doesn't seem likely to be a gold mine. Worse, if it became a truly lucrative sideline there are plenty of competitors ready and able to step into the wings and drive the returns down by offering to share such fees with the corporate host. But don't get us wrong; we're not planning to short sell Yahoo's stock.

User Recommendations

There's a lot to consider in choosing a corporate portal provider. While developers and service providers strive to make it seem easy, putting up a corporate portal is thought and labor intensive. We agree that the portal needs to attract and keep corporate users, but believe that the main decision points in making a product decision should be the features that the portal will provide for bringing information to employees and the technology costs behind it.

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