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AltaVista to close free U.S. e-mail accounts next month

By Todd R. Weiss
February 22, 2002 12:00 PM ET

Computerworld - Search engine company AltaVista Co. is refocusing on its core search business and will end its free AltaVista.com e-mail account service for about 200,000 U.S. customers on March 31.

In an announcement this week, the Palo Alto, Calif.-based company said that it has been working for two years to refine and expand its search technologies for the consumer and corporate markets and that it will now rededicate itself to its original mission of providing Internet users with a fast and high-quality search engine. By dropping services such as e-mail accounts, AltaVista said it hopes to achieve profitability.

A company spokeswoman said the changes will allow AltaVista to stay with its core business and avoid initiatives that don't bring in revenue.

The e-mail account closures won't affect customers using AltaVista.net e-mail accounts, which are maintained by Mail.com, or the approximately 150,000 customers using international AltaVista e-mail accounts, according to the company.

AltaVista, a majority-owned company of Andover, Mass.-based Internet investing firm CMGI Inc., was established in 1995.

AltaVista urged U.S. customers of its e-mail accounts to transfer to other free e-mail providers so they can continue their service uninterrupted.

The comany claimed that 50 million unique users come to its 22 country-specific Web sites each month for Web searches.

The free e-mail accounts were established as "a brand loyalty builder and [were] useful in the growth of AltaVista's traffic when we were following a portal strategy," the company said. But the e-mail services weren't found to be an effective marketing tool to expand AltaVista's search products.

James Kobielus, a senior analyst at Midvale, Utah-based The Burton Group Inc., said the AltaVista action isn't a surprise and could portend the future of other free e-mail services.

"You wonder how much longer there will be other places to go," he said.

"AltaVista is one of those brands that totally lost its first-mover [status]" as the first key search engine for the Internet, he said. "They were by far the lead search engine in the 1995 to 1996 time frame until Google [Inc.] came along."

Now, as the company returns to its searching roots, it's again changing direction by moving away from a mix of services, Kobielus said.

"It's funny how the industry develops so quickly and discards old business models," he said. "I get whiplash trying to follow it all."

Rob Lancaster, an analyst with the Yankee Group in Boston, said the announcement is an expected part of AltaVista's recent business model metamorphosis.

"They came out of the gate as a strong consumer portal and began to fade when the mega portals [like Microsoft Corp.'s MSN.com, Yahoo.comand America Online Inc.] came into force," Lancaster said. "They've really streamlined their operations as to what's making money."

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