These companies have maintained stable sideline businesses by providing off-the-shelf technology.Once the
standard-bearers for the "new" economy, search-engine portals including Yahoo,
Alta Vista, Ask Jeeves and Northern Light have taken a severe beating over the
last year.
But don&singlequot;t count these players out just
yet. From the early days of the Web, when the world marveled at search-engine
portals as impressive first-movers, right up to their more recent misfortunes,
these companies have maintained low-profile, but stable sideline businesses by
providing off-the-shelf technology, designed for in-house use by corporate
users.
This enterprise side of the search
technology business might be an ace in the hole now that the new economy has
grown old. The Aberdeen Group predicts that by 2003, sales of corporate portals
could reach $1.2 billion.
Alta Vista, for one, started out as a
software company that designed search-engine technology for private clients long
before thinking about hanging its shingle on the World Wide Web. Now, Alta
Vista&singlequot;s software side continues to grow steadily.
"From the beginning we&singlequot;ve been doing
software," says John Piscitello, senior business manager for Alta Vista&singlequot;s
software division. "The growth of enterprise software has been steady. There&singlequot;s a
lot of demand there."
Ask Jeeves, the portal that was
first-to-market with a viable "natural language" search capability, which allows
users to ask questions instead of guessing at search terms, had always planned
to market its technology to corporate customers, according to Ed Boudrot, a
product manager for the company&singlequot;s business solutions division. Boudrot&singlequot;s
department got its enterprise package to market much sooner than expected,
thanks to a compelling call from Dell Computer two years ago.
"Dell approached us, saying they loved
the experience with &singlequot;natural language&singlequot; searches on Ask.com," Boudrot says. Ask
Jeeves&singlequot; technology ultimately played a key role in helping Dell revamp its
customer service site. One of the most widely praised service areas on the Web
these days is Dell&singlequot;s "Ask Dudley," a clone of Ask Jeeves except that the icon is
a Jerry Garcia look-alike modeled after one of Dell&singlequot;s own tech-support guys.
Boudrot says his company, like Alta
Vista, is now aggressively pursuing enterprise customers. As part of its efforts
to expand the business solutions side, Ask Jeeves plans to add a software
package this year, giving customers a wider array of customization options.
Rather than attributing the push for
more enterprise sales entirely to the weak online ads market, though, Boudrot
says the portal side of Ask Jeeves is starting to mature, while growth
opportunities remain on the business solutions side. Right now, he says, the
company&singlequot;s $100 million annual revenue is split roughly 65% to 35% in favor of
the public Web portal, but says the business solutions side is experiencing
"phenomenal growth."
Northern Light also recently launched
its Single Point custom enterprise portal system, which allows companies to
create proprietary online gateways capable of searching not only internal
company documents, but also the Web.
In a recent case study on the Northern
Light enterprise portal by International Data Corp., author Sue Feldman, an
analyst at IDC, reported that the enterprise search engine market is one that&singlequot;s
young and is experiencing rapid growth. But, she warns, the competition will be
ferocious for companies that have grown up based solely on their success as a
public Web portal.
"There are a lot of players out there,"
Feldman says with a cautious tone. "And there are companies in this market that
are coming from a number of different backgrounds, able to offer many different
products and services."
As Feldman sees it, the dilemma for
companies known for their portals but wanting to corner the market on
enterprise-technology sales lies with the customer. "The question is, where&singlequot;s
this going to play out?" she asks. "One might guess that enterprises are going
to go after integrated solutions. But some will want a very specialized
technology, not a whole end-to-end package."
While Feldman and her colleagues at IDC
are busy piecing together numbers for an upcoming study of the enterprise search
engine and portal market, she says it&singlequot;s quite difficult to estimate the current
size of the space because nobody&singlequot;s clear about what companies are even out
there. "At this point, it&singlequot;s hard to give you any numbers—irresponsible even. Is
it in the billions? Yes. How many billions? I don&singlequot;t know."
While Advanced Book Exchange Inc., an
online used-book broker based in British Columbia, can&singlequot;t speak to the market as
a whole, it can speak about the impact Alta Vista&singlequot;s enterprise software package
has had on its budget. "I&singlequot;d say it&singlequot;s a significant cost," says Audrey McFarlane,
director of systems and quality assurance for Advanced Book Exchange. "But we
can&singlequot;t operate very well without a search engine."
With a database of 25 million used
books, the Web site (www.abebooks.com) started out with its own homegrown search
engine. But it didn&singlequot;t take long before the company needed something that could
scale as rapidly as the business. So two and a half years ago, when its homemade
search function couldn&singlequot;t keep pace anymore, the company had to choose, as
McFarlane puts it, whether to purchase a search engine or build one in-house.
The company chose to outsource the technology for a simple enough reason:
"Developing search engines is not our core business."
And that&singlequot;s just the kind of company
that search-engine businesses need to go after now that revenue has come back
into vogue—growing operations whose core business is not developing search
engines.