Yahoo! plans vocal internet service

Tuesday, October 10th 2000, 12:00 am
By: News On 6

NEW YORK – Flexing its muscle on a new Internet battlefield, Yahoo Inc. is launching a free telephone service that lets users call for e-mail, news and other information.

The initiative, to be announced Tuesday, pits Yahoo against America Online and some high-profile start-ups in a race to "voice-enable" the Web so people who are not near a computer can still get online information.

The urgency to introduce listening-based Web access was evident in Yahoo's decision to roll out its telephone portal without any of the speech-recognition or voice-activation features offered by TellMe and BeVocal.

In other words, users of the new Yahoo portal will for now be required to enter numbers on a touch-tone telephone keypad to select the information they want to hear.

AOL has yet to add a telephone-based version of its Internet service but recently acquired a start-up voice portal named Quack and owns a stake in SpeechWorks, a developer of speech-recognition technology.

Yahoo and AOL aren't the first to enter this arena, but both are confident that their millions of users will like the consistency of using the same service provider to access information by computer, phone or wireless device.

One major advantage that AOL and Yahoo boast is that their users already have online profiles with personally tailored information preferences, making it unnecessary for those people to recreate everything for the telephone versions.

"I think people may try out TellMe. But if they have very extensive profiles someplace else, the novelty may wear out," said Megan Gurley, a research analyst for the Yankee Group. "I don't want to set something up again. I'd much rather use Yahoo. What the large portals are banking on is that their relationship will garner more users."

Yahoo's new service, powered by Net2Phone, will allow online users of Yahoo's instant messenger software to make free calls through a computer to any telephone in the country.

Like competing telephone portals, the new Yahoo by Phone service has a toll-free number, although many users – those calling with mobile phones, for instance – would still be using minutes from their calling plans. The Yahoo service can also take voice mail messages at the same phone number.

To hold down costs, Yahoo will route calls to the toll-free number over Net2Phone's private Internet-telephony network, avoiding the access fees charged by operators of traditional telephone networks.

To generate revenue from the telephone portal, Yahoo plans to play brief ads, lasting three to eight seconds.

Yahoo said it decided to hold off on voice-activation features because it was dissatisfied with the quality of the latest technology.

"We want to provide a service to users that works 100 percent of the time," said Anurag Mendhekar, director of the company's Yahoo Everywhere initiative.

Analysts agree that quality is important, but they say it's crucial for Yahoo to introduce voice-command capabilities soon.

"The service has to work pretty well. You can't have a high misunderstanding rate, and a couple of them haven't got that part of the service right yet," said Ken Hyers, an industry analyst with research firm Cahners In-Stat.

Despite the competitive threat posed by Web heavyweights such as AOL and Yahoo, the smaller players still have their believers. Even as investors continued to flee Internet stocks last week, TellMe announced that it has received $125 million in funding from 10 institutional investors.

"The smaller players do have a chance, but I don't think a voice portal that tries to serve the entire spectrum of users will be as successful as one that targets a specific subscriber base," Mr. Hyers said. "The big problem right now is that there's dozens of voice portals out there, and the market is not going to be able to support that many. So they have to make sure the range of services they offer are what people want and that they are easy to use."