August 15, 2003

Yahoo may continue with the AltaVista Web site after it completes its acquisition of Overture Services, and may use some of AltaVista's search technologies on its own portal sites, according to an executive of Sunnyvale, California-based Yahoo. AltaVista, a provider of Web search services and technology, is currently a business of Overture.

"We believe that the AltaVista brand is still very strong, and has come to attract a particular type of user, and it is entirely possible that we may keep the AltaVista site to serve a particular niche of users," Phu Hoang, Yahoo's senior vice president for engineering, told IDG News Service. "I think that there may be opportunity for us to try (on AltaVista) new search features and new capabilities that are a little bit on the edge, that we are not yet ready to show up in the mainstream."

Hoang was in Bangalore Thursday for the formal inauguration of Yahoo's software development center in India.

Yahoo announced in July that it signed a definitive agreement to acquire Overture of Pasadena, California, which offers paid-search listings, with syndication through search engines on Web portals (news - web sites) including Yahoo and Microsoft's MSN.com. Overture sells its listings by auctioning off search terms to the highest bidder.

"We saw that search from a business standpoint was very much a commodity business, and could not bring in much profits," said Hoang. "Overture was the company that changed that landscape by making search the new hot thing, because they found a way to allow someone like us to drive a lot of revenue from search. This came from their ability to have a marketplace where small merchants can come in and bid for a search term. It became clear to us that this was a very sustainable business in search." The proposed acquisition of Overture will give Yahoo control over a key component of Yahoo's business strategy in search, said Hoang.

Yahoo expects to expand Overture's pay-for-performance search faster and more cost effectively in areas such as shopping, travel, and yellow pages, and to integrate contextual advertising throughout Yahoo's network, including sports, real estate, and autos. Yahoo also plans to sell a number of its own products and services, such as Yahoo Store and Yahoo Web Hosting, to Overture's over 80,000 customers, according to Hoang. "If you look at Overture's base of advertisers, these people are small merchants and small-business people, and we have a number of small-business tools and services that we can sell to them," said Hoang.

Yahoo's proposed acquisition may, however, make some of Overture's distribution partners uncomfortable, according to analysts. European Web access provider T-Online International AG, for instance, dropped Overture in favor of Google of Mountain View, California, citing a clause that allowed it to terminate the contract early if Overture was acquired by a competitor. MSN.com is another key customer of Overture.

"We would love to keep MSN, and we aim to keep them, but when we did the deal with Overture, we did the calculation that we would do the deal even if the contract with MSN does not continue," Hoang said. Yahoo will keep Overture as a separate company after the acquisition, because Overture provides its service to many companies, including Yahoo's competitors, added Hoang.

Picking Up Pieces
Palo Alto, California-based AltaVista was acquired by Overture in April of this year. Overture also acquired in April the Web search unit of Oslo-based Fast Search & Transfer, or FAST, a developer of enterprise (news - web sites) search and real-time filtering technologies. After the acquisition of Overture, these search technologies and services will become the property of Yahoo, which also has its own search engine. Yahoo acquired Inktomi, a Web search technology provider in Foster City, California, in December last year.

"We now have the assets and also the flexibility to provide the user the best search experience, whatever the (search) platform may be," said Hoang. "Choosing which of those platforms we will use is something we are continuing to work through. There are many aspects of a search engine. It may show up as Web search, or it may show up as news search, or as product search, or travel search."

FAST has traditionally been very strong in the basic science of crawling and indexing; AltaVista has been pretty strong in different needs and features of search, such as multimedia search and clustering search; while Inktomi has done a good job focusing on relevance, according to Hoang.

"They are all really good, nice pieces for us to put together an entire framework of providing the best search experience to the user," Hoang added. "What we find is that some of the technologies that we have work very well for the Web, and others work very well for the other components. So we are in the process of looking at the various technologies and mapping that to the various applications that we are intending to use." Yahoo's own search engine will offer basic personalization features within a year, Hoang added.

Source: Yahoo News

        

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