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Tech Industry

Yahoo aims at small business

The leading portal offers Web hosting and outsourced intranet services.

In a bid to extend its lead among Internet portal sites, Yahoo today broadened its small-business offerings, adding a Web-hosting service and outsourced intranet services.

But Yahoo isn't alone in lusting after the small-business market. Netscape originally launched Netcenter as a "business portal" and now claims 3.5 million registered small-business users. Lycos is expected to boost its small-business offerings shortly, following last week's announcement that it will begin hosting Web storefronts.

"We are committed to providing products to small-business owners that we can leverage off our consumer-focused products," said Tim Brady, Yahoo's vice president of production. He noted that Yahoo launched its small-business resource center in August and its free email product in October 1997.

"Netscape still has a more business-centric feel to it, and Yahoo has always tended to be more consumer-focused," said Jae Kim, Internet analyst at Paul Kagan & Associates.

Yahoo will offer Web hosting for $30 a month, which includes 25 megabytes of storage but not transaction capabilities. For now, sites that need more than 25 megabytes will have to go elsewhere.

Brady said Yahoo Site will use the same back end as Yahoo Stores, which since last June has charged $100 to $300 a month to host Web storefronts. It now has about 3,500 Net stores, and Web-hosting customers will be able to upgrade to add sales transactions.

Yahoo's new Connected Office service lets small companies create an intranet or internal communication hub, with password-based security. It builds on the consumer-oriented Yahoo Club offering with private chat areas, message boards, and shared calendar applications.

But not every small business will get the chance to ride Yahoo's popularity. Yahoo is also going to charge businesses for an expedited answer on whether Yahoo will list their sites. For a non-refundable $199 fee, Yahoo will notify customers within seven days whether they'll be included the directory or not. Brady said Yahoo is not changing its editorial guidelines for listings but will tell those rejected why they weren't included..

Analyst Kim defended that new fee. "While there's no assurance or guarantee you're going to be accepted, there needs to be a bar, a filtering agent to separate the wheat from the chaff. For everything else in life, you pay for speed."

For now, Yahoo is still chasing Netcenter, which counts 3.5 million small businesses among its registered users, 35 percent of registrants.

Netscape debuted its small-business services in May 1998, a month later adding a "virtual office" set-up from Netopia plus a Web-based data backup service from Atreva. Its Web hosting, offered through Concentric Networks starts at $19.95, lower than Yahoo's price.

Hillary Mickell, Netcenter's group manager of business channels, called her site's small-business channel "overwhelmingly successful," saying its inventory of banner ads sold out immediately and commands the highest rates on Netcenter.

In December, Netscape acquired @Web, which has tools to optimize Web sites, and incorporated the services in Netcenter. Services include performance tune-ups, registration with directories and search engines, and tracking tools.

Still absent from Netcenter, however, are hosted storefronts, though Netscape has repeatedly said it intends to find ways to exploit its e-commerce software via Netcenter. Mickell promises more services soon.

Lycos is headed that way too. Last week it announced licensing Open Market's e-commerce software for hosting storefronts. Through its Tripod and Angelfire properties, the Lycos network already hosts millions of Web pages.

"We will enable those members to turn their homepages into stores where purchasing can occur," Jeff Bennett, Lycos' vice president of e-commerce, said when the Open Market deal was announced.

Excite in July launched a small-business channel provided by Intuit, called Small Business by Quicken.com. The channel, which includes Quicken's "CashFinder" sevice for small business loans, also runs on Excite's WebCrawler service and on Quicken.com.

Yahoo's news today could accelerate planned announcements in the small-business space at other portals.