17 Gifts at All-Time Lows Gifts Under $30 'Forest Bubble' on Mars RSV and the Holidays MyHeritage 'AI Time Machine' Postage Stamp Price Increase Household Items on Amazon Melatonin vs. GABA
Want CNET to notify you of price drops and the latest stories?
No, thank you

Will broadband determine Yahoo's future?

The portal giant's president discusses whether the pressure is on for Yahoo to cozy up to a high-speed access provider.

What is Yahoo to do now that its competitors are stepping into the world of high-speed Internet access?

Within a week, the Web portal powerhouse has witnessed a number of its competitors make significant preparations for the coming shift among consumers toward faster Net connections.

Earlier this week, for example, cable modem access provider @Home acquired Yahoo rival Excite in a stock deal designed to beef up content offerings on the company's high-bandwidth network. Last week, online giant America Online said it would roll out digital subscriber line (DSL) service within Bell Atlantic's markets. AOL's push into DSL marks a major step for the technology's ongoing battle against cable for consumer preference.

In addition, NBC and News.com publisher CNET: The Computer Network's joint portal venture Snap Tuesday unveiled Cyclone, a high-speed access portal.

Now that broadband access is beginning to penetrate the minds and homes of mainstream consumers, is the pressure on for Yahoo to cozy up to a high-speed access provider?

President Jeff Mallett said the company has instituted an initiative called "Turbo Yahoo," through which Yahoo services and features will be built up so that they can be supported on higher-bandwidth access services.

But analysts say the future of broadband access remains uncertain. While @Home has beat most expectations in subscriber growth, cable modem adoption is still sparse. The company reported 330,000 subscribers for its high-speed service at the end of 1998--up from 50,000 the previous year but not yet a definitive leap.

For the moment, analysts said, succeeding on the Web still boils down to distribution of brand and services, such as the "destination" site model adopted by Infoseek and Disney.

"It's more important to partner with a media player than a broadband provider because of cross-promotion," said analyst Mark Mooradian of Jupiter Communications.

International Data Corporation analyst Barry Parr agreed that media partnerships will be more beneficial in the long run than access partnerships, primarily because of promotion potential. The merger of @Home access with Excite content, he added, should not force Yahoo into a rash decision to shake hands with a DSL or cable modem access provider, since the offering of high-speed cable access remains an untested business model.

"It's far from clear that the model of linking access with content is working," said Parr. "The only positive example of vertical integration is AOL. Everyone wants to be AOL, but the opportunity to be AOL is gone."

News.com caught up with Yahoo's Jeff Mallett in the aftermath of the portal space's latest shake-up:

CNET NEWS.COM: Is Turbo Yahoo your initiative in preparing for broadband?
MALLETT: Yup. We put the initiative goal in last March. We worked for a month down the path that it would be a separate group, and a separate service. But we backed off of that after looking at it and said, "This is going to be threaded everywhere throughout our communications group, our community tools--everything Yahoo does, basically." We pushed it throughout the organization that everybody needs to begin integrating and proposing broader bandwidth-type applications.

When we get enough critical mass from content and services underneath Yahoo, we'll give our users an option--if they are at a 128 kbps-or-above Range--the ability to view the site in a "turbo" view, which won't take away from Yahoo as you know it today, but will lead in with the multimedia stuff first.

What is the effect of the @Home-Excite acquisition on Yahoo's broadband strategy? Does this put the pressure on you to start partnering with broadband access providers at this point?
[There was] no sudden flip of our thinking or strategy or urgency. We don't want at this point to get off our strategy, which is to provide Yahoo with as many distribution points as possible. Even if it means sometimes we're promoted in a secondary fashion--even if we're not the house brand or house service.

You will see us in the normal course of business adding a number of distribution partners, both with hardware vendors as well as directly with access providers, that will be, on a nonexclusive basis, carrying Yahoo.

Had Yahoo looked for an opportunity with @Home or Excite?
We did have the good fortune both with the @Home opportunity from a business alliance standpoint, and Excite in an acquisition standpoint. On the @Home side, it forced us to really look hard, and the net of that was they were looking to us to commit exclusively to their platform, i.e., cable. We think they are going to be successful, but we feel that it's way too early now to make the call on who's going to emerge as the big access provider for broadband. In fact, we were big believers that it's going to be multiple providers.

So you think it's too premature at this point to commit to one form of broadband delivery?
Oh, without a doubt. Once again we talked to all the RBOCs [Regional Bell Operating Companies]?everybody out there. And even if you look at the most bullish numbers two or three years out, it's still going to represent less than 10 percent of all home Web consumption in the United States. It's clearly too early now to place a single bet, because we think that if it was the wrong bet, it basically could tie up an audience we couldn't reach to our ADSL or DSL partnership with the RBOCs.

You were also in talks with Excite about a potential acquisition. Why did those talks fall through?
They were good discussions--very professional--with [Excite CEO] George [Bell] and his team. We looked at it and when we looked at the incremental [value] that it would bring to our company, it wasn't too unique or significantly able to give additions to Yahoo, just more of the same. The valuation just got way out of reach. It didn't make sense for us to acquire it.

Can you now set your sights on making an acquisition or investment in a different portal on a lesser or equal scale to Excite?
Well, the Excite opportunity was less from a need to feel like we needed to add an additional service. They had been proactively out knocking on doors pretty aggressively after the AOL-Netscape agreement. So that's why we pursued [the acquisition discussions]. It wasn't because we felt we needed to acquire one of the mid-tier portals such as a Lycos or Excite.

A lot of people are saying that the two portals left are Lycos and Yahoo. A lot of people are also counting the days left for either company to remain independent. What do you think about that?
Lycos probably will remain on some people's white boards as an acquisition target. But from our standpoint, [being acquired] is not a part of our exit strategy. We think that we today have enough critical mass to be a big company standing five, ten years down the road. Unless we think [an acquisition] is necessary for our business to continue to grow--which it doesn't appear to be, it looks like we can grow on our own--we don't have any plans on talking that type of talk.

The portal space is becoming more and more consolidated--with AOL and Netscape, the Go Network, Microsoft, and now @Home and Excite--who do you really see as your main competitors here? Who are the ones you are watching out for the most?
We do believe there will be three big, global-branded networks that are going to probably emerge. Right now, just looking at it, we believe still Microsoft, AOL, and Yahoo are the best-positioned companies in there to be one of those big three. So, we view AOL and Microsoft as competitive for usage and eyeballs, and are the biggest folks up there. Then, of course, you never want to take your eye off the ball with the scrappy ones--the Excites and the new @Home ones. But, it's mostly AOL and Microsoft.

Do you anticipate that there will be a way that @Home and Excite could shut you out of their service? If so, could that be a problem?
No. At the @Home conference call [Wednesday], [chief executive Tom Jermoluk] made it really clear that they will have an open access platform that will carry AOL, Yahoo, MSN, and whatever services, on a business relationship. Even without Washington, D.C., having to throw its muscle around a little bit, it will be an open platform. Folks will be able to get to Yahoo. We feel we will be able to promote Yahoo from the @Home platform as we had planned to do in the normal course of business.