Lycos Adds NeoPlanet Browser

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May 17, 1999 (2:05 PM EDT)

By Malcolm Maclachlan,

Lycos is trying to one-up its competitors in the portal race by adding a browser.

On Monday, the company teamed with NeoPlanet to offer a co-branded version of the NeoPlanet browser. NeoPlanet is a browser interface that runs on top of Internet Explorer. A Netscape Gecko-based version is on the way.

Users who download the NeoPlanet client will now be taken to Lycos as their default content. This replaces an earlier deal signed last October with portal competitor Snap. Drew Cohen, CEO of NeoPlanet, said the company was not satisfied with the amount of traffic Snap was driving and chose Lycos as the up-and-coming portal.

Lycos, in turn, will offer its users co-branded versions of NeoPlanet. These will include links to Lycos content and its Tripod webpage hosting community.

The companies did not release financial terms of the multi-year deal. Cohen said that it mostly involved cross promotion and ad revenue sharing. Lycos has also guaranteed several million downloads of NeoPlanet, he added. NeoPlanet will be free to sell non-Lycos versions to ISPs, Cohen said, but will not be signing up other major portals.

The idea behind NeoPlanet was to provide portals and ISPs with a simplified, easily customizable browser. Having its own browser, Cohen said, gives a portal the kind of stickiness that America Online enjoys with its proprietary service, because it can imbed its own services into the browser.

"The portals are fairly similar," Cohen said. "The one that's going to be easy to use is the one that's easy to use. The client side is going to be more influential than all the branding they do."

Portals and ISPs are now able to do their own customized versions using both IE and Netscape. However, Cohen said, NeoPlanet offers Lycos access to a pre-installed user base of 1.2 million, and a 110,000 unique users a day. NeoPlanet also lets them sell advertising in a persistent window in the browser. This advertising can be directly at the particular user via a profile of basic demographic information and surfing habits.

Michael Bernstein, an analyst with the Gartner Group, said he questions how NeoPlanet is positioning the product.

"There are people who use the browser who don't change the settings and use the defaults," he said. But these generally aren't the high-end users NeoPlanet is pursuing through advertising on major technology news sites, he added.

Bernstein added that NeoPlanet is essentially competing with the biggest players on the Internet -- Microsoft and AOL -- while holding a mere 1 percent of the browser market. The company is offering very generous revenue sharing deals to partners, he said, in an effort to up distribution.

Melissa Bane, an analyst with the Yankee Group, said NeoPlanet's strategy of going after high-end users makes sense. Web newbies, she said, are not likely to download the software. There is already too much competition for their attention, with portals and PC makers offering online access through icons right on the desktop. Instead, if they can sell more savvy users on the interface, it would have a trickle-down effect.However, he added that he liked the interface, and expects to see more companies using it. This includes a major movie studio that will offer a version co-branded with one of its films.

Lycos has been an a campaign to up its profile, and is now widely seen as closing the gap on industry leader Yahoo. Last month, it gained a surge in stock price when it announced that it had passed Yahoo in reach in the latest MediaMetrix usage surveys. The results showed that Lycos had a 51.8 percent reach on the Web and 31.9 million unique users in March, compared to a 50.8 percent reach and 31.3 million users for Yahoo. However, this counted users gained from Lycos' acquisitions such as that of Tripid, but did not include new users Yahoo gained in its purchase of webpage hosting leader GeoCities.

Working with NeoPlanet gives Lycos the opportunity to turn all its new properties into a more coherent, better-branded whole, the Yankee Group's Bane said.

"They've done a good job in buying up traffic," Bane said. "But they haven't articulated a strategy for integrating that traffic."