AltaVista Tightens Belt, Stays Hopeful On Search

AltaVista had another round of layoffs in January, losing 200 people, which cuts the company workforce to about 600 total. AltaVista is retaining its search engineering staff and says it fully intends to continue developing its own web wide search product, rather than outsourcing this to a third party such as Inktomi, FAST or Google.

"We're absolutely not reducing our equipment or search engineers. As a matter of fact, it's the opposite," said Ralph DiMuccio, AltaVista's industry relations manager. "Another group that was left virtually untouched was the enterprise group."

The enterprise group is AltaVista's division that produces software that companies can use for intranet and site specific search. AltaVista sees this as a growth area, nor is it alone. For instance, last year Inktomi acquired Ultraseek, the enterprise product that grew out of Infoseek. This was so Inktomi could diversify its search offerings and compete for intranet and site specific clients.

AltaVista's search engineering team supports both its web search and enterprise search operations, and the company feels the synergy between web and enterprise is essential to success in both areas.

"If we are going to be a serious leader in the enterprise software market, then we need a group behind that to take what works on the web and productize it," DiMuccio said.

I wouldn't necessarily agree with this. Web search and enterprise search have different requirements, and I don't think you have to be a web search company in order to successfully serve the enterprise market. There certainly are some synergies that can come out of doing both, of course. More importantly, a company like AltaVista gets considerable play when pitching its enterprise product out of the fact that some of the core technology is used for web search. If AltaVista outsourced its web search, then it would lose this advantage, irregardless of the fact that it might not reflect any real problem with the enterprise package.

Of course, by offering web search, AltaVista can also go after a third market: portals and vortals who want to license web search. The company has about 50 to 60 such clients currently, it says, and plans to go after more.

"We are very aggressively pushing into the search licensing market, and maybe we'll get back some of the bigger clients we used to have," DiMuccio said.

The biggest of those clients was Yahoo, lost in 1998 to Inktomi, which itself lost to Google in 2000. AltaVista also gained, then lost, MSN Search to Inktomi in 1999. With both Yahoo and MSN Search, one reason suggested for the loss was AltaVista's attempt to be a strong portal competitor to those companies. Those portal pretensions were dropped in September of last year, and the change to concentrate on search, and nothing but search, showed up last week with AltaVista's redesigned home page.

Missing is the more channelized design meant to bring users into sticky areas of the site. Indeed, things like photo albums and free home pages are gone or going away. Instead, the face of AltaVista has been simplified, so that the focus on search really is front and center.

"What you are also going to see is the ending of most of our content relationships. AltaVista Live will be gone," said DiMuccio. "There's no portal play. It's search and directory, going forward."

Conclusion? Wait and see. Lycos once suggested that it had no plans to drop its own homegrown web search product yet went ahead and did exactly that last year in favor of FAST and Inktomi. However, Lycos did not also have a software division nor did it do much with web licensing. So, perhaps AltaVista will make it in maintaining its own search index, and the web would probably benefit from having an additional resource like this. As for the viability of the AltaVista site itself, that will clearly be tied to whether the company can monetize the service.

"You are seeing a struggle to find the right business model," said DiMuccio. "We have to be able to stand on our own as a company and keep growing revenue, even though the advertising pie may be shrinking."

AltaVista
http://www.altavista.com/

AltaVista Cuts 200 Jobs
SiliconValley.Internet.com, Jan. 18, 2001
http://siliconvalley.internet.com/news/article/0,2198,3531_564251,00.html

A few more details specific to the recent cuts.

Terra Lycos lassos AltaVista's Raging Bull
News.com, Jan. 30, 2001
http://news.cnet.com/news/0-1005-200-4649115.html

As part of its jettisoning of non-search features, AltaVista sold its Raging Bull stock site to Terra Lycos.

No IPO for AltaVista...Again
SiliconValley.Internet.com, Jan. 10, 2001
http://siliconvalley.internet.com/news/article/0,2198,3531_557401,00.html

Forget the IPO plans. With dotcom stocks in the dumps, AltaVista has dropped plans to go public for the near future.