News Analysis & Commentary: The Internet
Will Business Yahoo! Too?
The Web portal now peddles corporate online services
Yahoo! is going corporate. The Santa Clara (Calif.)-based company is readying a button-down ad campaign, slated for a March debut, aimed at America's biggest companies. The campaign is just part of CEO Timothy A. Koogle's plan to double 2001 revenues from corporate customers.
Yahoo is counting on hauling in $200 million by building corporate portals--Web sites for a company's employees--and setting up conferences over the Internet. According to analyst projections, that will account for 17% of Yahoo's expected 2001 revenues of $1.2 billion, up from 9% of revenues in 2000. So far, Yahoo has deals with 18 customers for its corporate-portal offering, and ran over 1,000 online conferences last quarter.
Yahoo would seem to have little choice but to branch out. On the heels of its Jan. 10 yearend earnings announcement, company officials warned that a swoon in Internet advertising would produce a 26% drop in first quarter revenues, to a projected $230 million.NET CACHET. But Yahoo's new strategy has plenty of perils of its own. Growth in information-technology spending is expected to slow to just 9% this year, from 12% in 2000. The $750 million corporate-portal market already has over 50 competitors. Most important, Yahoo must somehow extend its quintessential consumer brand into a name that inspires big businesses to fork over payments for Web software and services.
Many have already failed to make the transition. America Online Inc. tried to ramp up its corporate services in 1997. But since peaking at 19% of AOL's revenues in 1997, enterprise solutions declined to just 7% in 2000.
Sure, Yahoo is in a slightly different position as one of the best known Internet brand names. But with Net advertising withering, it had better hope its new strategy bears fruit.By Ben Elgin in San Mateo, Calif.