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Waitt, Yang think beyond the box

Gateway's CEO and Yahoo's co-founder explain how they hope their deal will evolve to extend beyond simplifying and customizing the Net experience for PC users.

Yahoo's co-founder Jerry Yang and Gateway's CEO Ted Waitt are thinking outside of the box--the PC box, that is.

Gateway and Yahoo said today they will offer a co-branded default home page for subscribers to Gateway's ISP service, called "gateway.net." This will help easily funnel Gateway users to the Yahoo site where they can personalize their Web surfing with such information as updated national news, sports, financial information, and local weather reports.

Yang, Yahoo's chief "yahoo," and Waitt spoke with CNET News.com today to explain their hopes the deal will evolve to extend beyond simplifying and customizing the Internet experience for PC users. Both executives hope the agreement is a jumping off point for providing consumers personalized information on devices as diverse as cable-set-top boxes, handhelds, cell phones, and more.

A number of PC companies have secured deals with portal players to simplify the Net experience for consumers--with one side benefit being that portals are able to build traffic, while PC companies see a residual revenue stream from PC sales. But both have to deal with a future where a wide array of non-PC digital devices need to be networked in a home and office to share information.

"Today is only the beginning of this relationship," said Yang. "A lot of the reason we took as long as we have is not because couldn't make an announcement earlier. Rather, it's because we wanted to work on a 'barrierless' sharing of data" across a growing array of devices, he said.

For example, a Gateway customer might buy a PC with a dial-up modem, but might upgrade to a cable modem in the future; Yahoo wants to be able to automatically customize content for a broadband environment when that upgrade occurs, he hypothesized.

Looking into the future, industry analysts are suggesting that portals are the desktop of the future. (See related story).

Already, Yahoo's portal service is able to replicate, if not replace, a number of the stand-alone applications found on PCs. Free email was the first service provided by portal sites that mimicked a standard PC application, and now scheduling software, address databases, and other "productivity" applications are being offered for free on various Web sites.

"It's about the consumer's information, and not the device they access it through," Yang offered. "Our strategy on broadband, on television, and on devices outside the PC is to allow users to [surf and] create an experience that's suited for that device. We have technology on the backend that will let us do that, whether it's a pager or a cell phone, that will let us do that."

In light of this developing network-centric model of computing, Gateway's Waitt said the PC isn't about to disappear, but its role in the home could evolve from general-purpose machine to a server-like appliance, dishing out information to terminals, mobile workpads, and handheld devices.

"We are really investing quite a bit in offering home networking solutions, and having a variety of solutions, whether it be a PC, our Destination [PC-TV hybrid], down to small products you take with you and Internet appliances," Waitt said. "Clearly, we are investigating opportunities outside of the traditional PC space."

But the problem, he notes, is that there needs to be a simple way to tie those different devices together. In essence, Gateway is looking to Yahoo to provide user's information to whatever devices his company might decide to sell.

Fast Net access a key to vision
One of the key elements to fulfilling both Yahoo and Gateway's futuristic visions of networked appliances and PCs is high-speed Net access, whether provided through DSL or cable modem technology.

Yahoo's main sticking point in extending its distribution lies with the market for cable modem service. Although the subscriber base is fairly limited--estimates range from 300,000 to 500,000--the company doesn't want to be left out of a market that could eventually extend to 10 million or more customers.

Cable companies and their affiliated access providers, either @Home or RoadRunner, are fighting attempts to get them to sell their new high-speed Internet connections to competing service providers such as America Online and portal players such as Yahoo. (See related story)

Yahoo's president and COO, Jeffrey Mallet, said the company would likely seek out deals with access providers. Why will the cable companies open up their doors to Yahoo? Mallet said the key is Yahoo's 35 million registered users.

"We anticipate good companies will listen to that and give customers a choice. We plan to be one of the choices they want to pick," he said.

Yang was more blunt, saying that with competition from DSL and wireless providers, cable companies would be crazy to only offer one portal option. "They risk losing market share otherwise," he said.

For Gateway, the issue is also one of partnering. Waitt said Gateway is working on partnerships with cable access companies. The deals could resemble those that Dell has done, in which a customer ordering a new PC has it customized to include a cable modem. (See related story)

The main benefit for cable companies is that the cost of acquiring a new subscriber is lowered with a partnership--cable companies would only need to install a line to a house, and wouldn't need to spend costly time opening up a computer and installing the cable modem and other equipment.

Gateway company is also poised to offer DSL service through its new partnership with UUNet, which is providing the network for the gateway.net service.

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