Yahoo president predicts Net explosion

Yahoo’s president warned investors last Thursday not to be fooled into thinking the Web was a passing fad just because so many companies had withered along with Net hysteria. “One of the myths now is, ‘That was fun, but now it’s over,’” said Jeffrey Mallett, president of Web portal Yahoo. “We are just kids on the Internet; we’re only seven years old.”

That is the amount of time it has taken the Internet to reach a quarter of the American population — the fastest-ever growth of a medium — and its reach would get deeper and wider with the rest of the world now catching up, he told an investors’ conference in London.

Mallett said the Internet’s four key powers are that it is interactive, measurable — so advertisers can check the effectiveness of their work and businesses can anticipate trends to a hitherto unknown degree — global, and available to a vast, engaged audience. Mallett’s predictions appeared aimed at reassuring investors who have seen money vanish as more once-promising companies go bust, especially in e-commerce and pure online ventures.

He said the last five years had basically been a time for big established companies to test the Net, but they would now have to embrace it or lose. The next five years would turn the Web from something useful and interesting, “a new way to do old things,” to something absolutely essential for everyday life. “If this is true, we’d better all hold on because we haven’t seen anything yet,” he said. “The next five years will outpace the last.”

The Internet will be everywhere — in planes, taxis and schools and people will take it on their holidays with them using mobile wireless devices. But its use between businesses, and especially within big organizations, would explode more rapidly. Web surfers would demand video, audio and transactions as well as just text; mobile devices would become vital; and the first-mover advantage that companies such as Yahoo still enjoy would come under threat as others catch up and compete. “First-mover is an advantage today, but it is going to be eroded,” Mallett said.

Internet users around the world are expected to almost double to 540 million in two years, and the amount they spend online is set to quadruple to almost a trillion dollars. Mallett said Yahoo is developing its corporate business, where it organizes and runs in-house Web sites for big corporations such as Honeywell. “Most of our hyper-growth is happening in this platform; it’s a new audience,” he said.

Yahoo has some 175 million visitors around the world, but they spend only an average of three minutes a day on the Yahoo site. The trend for time spent on the portal, however, has moved sharply upward, he said. The company, which has portals in about 30 countries, makes about 80 percent of revenues from advertising with the rest split evenly between transactions and services such as online broadcasting of corporate video presentations. Mallett said he hopes services could increase as a share of revenues to about 15 percent to 20 percent in a couple of years.

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