Portals on new search

If much of the Web's future is headed toward television, as many believe, what will become of today's Internet portals?

Executives at Yahoo, America Online, Excite, Lycos, and other top portal companies are bullish on this new market potential, looking to expand their brands beyond personal computers. As more household appliances get wired, portals could become more mainstream, they say.

But questions remain whether the Internet heavyweights of today will be the controlling forces in the onset of a next-generation digital boxes and other devices combining television, phone service, high-speed Internet access, and myriad other features. Although portals have become almost synonymous with the Internet, the short life span of their industry has been directed at personal computing, not television or telephones.

"People who make TV sets, people in the cable industry--they don't think in the same way that computer players do," said Josh Bernoff, an analyst at Forrester Research. "The computer power base walking into the TV space will find they're in a foreign country."

As it stands today, the Internet landscape is dominated by many companies that began as search engines and have expanded to become a one-stop shop for a broad range of services and features, including free email, chat, instant messaging, communities, and news headlines.

Outside the PC industry, however, the notion of a portal can take on an entirely different form. Companies that make cable television set-top boxes are developing electronic programming guides that could serve as a combined PC-TV portal, for example, and broadcast networks have begun developing interactive screens that link to the Internet.

Some analysts believe that TV viewers want to receive information in a more passive, simple format with rich audio, video, and graphics. That's why high-bandwidth access may be one the first crucial steps for the Internet to appeal to the TV viewer with information that is not based mostly on text.

"With television, life gets more complicated. The fact that it's so ubiquitous means there may be more opportunities to get access through them to other things," said Ron Brachman, research vice president for AT&T Labs. He also sees fundamental differences in the ways the Internet and television are used.

"On the Web, it seems, most people are creatures of habit--they go back to the same places and probably don't change their home page too much," he said. "But think of cable television in a hotel--a converter box resorts you to the hotel screen first. The fact that you and I find that aggravating means that we might find alternatives."

Even before the widespread acceptance of so-called convergence devices, the Web portals are facing a critical challenge from such services as @Home and and Time Warner's Road Runner, which have teamed up with cable television systems to provide Net access using high-speed modems. Analysts expect cable Net technology to outpace its main competitor, copper phone connections known as digital subscriber lines.

Providing connections more than 100 times faster than the standard 28.8-kbps dial-up lines, these cable modem companies have begun to use their own interface based on these high speeds--essentially creating their own portals and bypassing their Web counterparts.

That would certainly put a damper on expansion plans such as the "AOL anywhere" campaign that aims place its interface in every Web-enabled device in a household, from appliances to television sets. All of these gadgets will link to one broadband connection that America Online will also supply, according to Barry Schuler, president of AOL interactive services.

"We think people want one service that takes care of all their Internet needs and have access to their services from many different platforms," Schuler said.

It is true that subscribers to these cable services can simply change the default home page to another Web portal. The question is: Will they?

"I don't think the main portals are providing the services that mainstream consumers need," said Richard Gingras, @Home vice president and editor in chief. "I don't think they, in their present states, are offering the services that a set-top user may want to use."

Publicly, portal executives express confidence in their desktop business model. "We still see the PC as being the primary access device for folks," said Jeff Mallett, Yahoo chief operating officer. "We will be the one to evolve from the dial-up market."

At the same time, his company is developing Turbo Yahoo in anticipation of the wide installation of high-bandwidth networks that will allow richer video and audio feeds. Others expect to introduce multiple navigation interfaces for different platforms, ranging from digital television to a "smart watch."

Some portal executives said they could simply redo the interface on their offering and sell it to manufacturers of other devices as the default home page.

"Why not just take what you have for the Web and redo it for television?" said Halsey Minor, chief executive of Snap, a joint venture between NBC and CNET: The Computer Network, which publishes News.com. "The major PC portal players already have a huge head start, and so simply serving it up in a different user interface on TV is not that hard to do."

That may be easier said than done. "It's really putting your head in the sand as far as the difference between the way that TV viewers look at the world and how computer users look at the world," Bernoff said, referring to the belief in changing the user interface.

Patricia Vance, senior vice president and general manager of ABC Internet Group, agrees: "Unless the experience of surfing the Web is better on TV than on a computer, I think for portals just to assume that people on TV are going to want to do that are going to need some more discussion. TV is a passive experience, and it sucks you in in a different way than a computer."

As a result, Bernoff expects "device-specific" portals to be developed. "Yahoo is very suited to needs of a computer viewer, but TV viewers are not the same--they want to have exactly the stuff they need to pop up in front of them and be have it be associated with television," he said.

Portals will have to push their brands out of the computer box and into the consciousness of the mass market before they can achieve common usage, analysts and industry executives say. Companies will need to take aggressive steps to increase distribution while lowering marketing costs.

Such concerns were the driving force behind some high-profile partnerships this year with companies that have the resources and distribution to make a portal a household name.

In June, media giant NBC purchased a stake in Web portal Snap in a deal with CNET and has already launched commercials during prime-time slots. Entertainment and media behemoth Disney followed suit with a stake in Infoseek and has since announced that it will launch a new portal.

But the portal leaders Yahoo and AOL have resisted the urge to ink equity deals with large media companies, trying to go it alone. That resolve could weaken when their rivals finalize their big media deals and benefit from escalated resources, promotions, and distribution.

"As soon as you see Disney heavily marketing Infoseek, it will be likely that you'll see Yahoo cut a deal with a media company or more aggressively partner with one in exchange for media placement," said Mark Mooradian, a group director at Jupiter Communications.  

News.com's Mike Yamamoto and Dawn Kawamoto contributed to this report.

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