Compaq Inherits AltaVista's Portal Ambitions

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June 18, 1998 (1:11 PM EDT)

Compaq Inherits AltaVista's Portal Ambitions

By John Borland,

With a new look and a new corporate parent, the AltaVista search service is refocusing on high-traffic portal sites.

Portal sites are aggregate websites people can use for entering the Internet as well as for e-mail, chats, and other Internet-related functions.

The merger of parent company Digital (company profile) with Compaq (company profile), sealed last week, carries with it the promise of new marketing momentum as the site is promoted along with the new company's computers. And since the deal was signed, AltaVista has slowly been adding content features and partners in an attempt to catch up with competitors Yahoo and Excite.

"Our goal is to be a major portal right now," said AltaVista spokesman Don Bradley. "AltaVista believes it all begins with search. By adding content and organization, we hope to grow the site even further."

But analysts are skeptical of the site's ambition as long as it is run by computer manufacturers instead of a media company. "The brand is dusty, to say the least," said Zona Research analyst Vernon Keenan. "I don't see them going anywhere unless they sell."

Under Digital's lead, AltaVista has languished as a kind of second-tier portal, slow to take advantage of the personalization and other traffic-driving strategies pioneered by competitors like Yahoo. "They were positioned to be one of those portal sites," Keenan said. "But they really dropped the ball on that."

Digital has used the site as kind of technology showcase, spotlighting the search engine and more recently its language-translation features, without expanding its content as quickly as the other portal competitors.

This has started to change in recent months, however, as the site has added free e-mail and boosted its editorial content. Early this month the site reorganized into content "zones," and this week added an ABC news headline service.

AltaVista also faces hurdles -- it doesn't even have rights to its own domain name. AltaVista.com brings users to the Campbell, Calif.-based AltaVista Technology's site, which gets about 500,000 hits a day from confused visitors.

The company also has had trouble getting the rest of the world to accept its own traffic figures, a critical point for an ad-supported enterprise. AltaVista routinely comes in below the other major search engines in ratings compiled by companies like Media Metrix and Relevant Knowledge, which the company said doesn't reflect its own estimates of 36 million daily page views.

"Those figures are very important to how the site is perceived, especially in terms of advertising," said Bradley.

Nevertheless, Bradley said the site is breaking even with advertising and technology licensing revenues, which should help endear it to its new corporate parents.

"Compaq plans to build on Digital's AltaVista franchise, which includes one of the leading search engines on the World Wide Web," said CEO Eckhard Pfieffer in a PC Expo keynote speech on Tuesday. "We believe this will help establish AltaVista as one of the most popular sites on the Web."

But analysts say the AltaVista site needs a partnership with a major media company to succeed. "[Compaq] should spin it off, get an investment from a media company," said Forrester Research analyst Bill Bass. "Having TV to drive people to your site is far and away the most effective way of drawing traffic."