"This will greatly expand [Excite's] ability to penetrate the home market," said Chris Lochhead, chief marketing officer for Scient, an e-business strategy consultant.
Until now, Excite has been toughing it out in the portal wars, making revenue-sharing arrangements with online retailers and hoping to snatch traffic away from the likes of Yahoo and Lycos. But once the acquisition goes through, Excite will enjoy first dibs on @Home's growing list of subscribers, simply by virtue of being the first thing users see when they log on.
This strategy is more like that of America Online, which leverages the control it exercises over its subscriber-base to make lucrative e-commerce deals. AOL users can make purchases online without having to repeatedly enter credit-card and other information. Further, AOL is able to direct its subscribers to e-commerce partners in a way that Yahoo, as a freestanding Web site, can't match.
"Right now, when you go from site to site, you have to put different information in every time you go to a new site," said Mike Wallace, an analyst at Warburg Dillon Read. "[@Home] will now have all the information they need on?subscribers who want to make purchases. It makes the whole purchasing process a lot smoother."
"Just like AOL, the combined Excite and @Home will have a recurring revenue stream from a subscriber base, as well as credit card and shipping relations," said Andrea Williams, an analyst at Volpe Brown Whelan. "This is very precious."
Excite will also benefit from @Home's speedy service, which will potentially enable all sorts of new opportunities for e-commerce, from full-motion video to interactive advertisements. @Home last month acquired Narrative Communications, an online-advertising firm that develops technologies that, among other things, allow users to place retail orders from within advertisements without leaving the Web page they are viewing. The firm also provides advertisers with high-level ad-tracking capabilities-something that will become especially useful as high-speed Net access converges with television.
"The jury's still out on the relationship between the enhanced-TV [interactive television] experience and the Internet experience," said Scient's Lochhead.
But in the meantime, the loyalty of @Home's subscriber base will likely lock in Excite as a major e-commerce player. "As these [broadband] networks become more pervasive, the subscribers will be much more linked to the service than they are today," said Steve Mucchetti, Scient's chief operating officer.
Sites such as Yahoo and Amazon.com are "just bookmark sites," he said, whereas @Home's and AOL's proprietary services come close to compelling users to follow their lead. "Yahoo and Amazon are going to have to do something along the same lines or risk being left out," he said.