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From public portals to proprietary software
By Ryan Underwood

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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.




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