BUSINESSWEEK ONLINE : MAY 1, 2000 ISSUE
SPECIAL REPORT Yahoo! Look Who's Yakking Away At the end of last year, John Garrett discovered that he could use Yahoo!'s (YHOO) Web site to reach out and talk to someone. Garrett is one of 70 employees at eFrenzy.com, a San Francisco startup that created an online marketplace for services such as housecleaning and tax preparation. Now when eFrenzy employees who are traveling want to chat verbally with their cohorts, they simply click on a button on Yahoo's instant messaging service and gab away. ''It's definitely handy,'' says Garrett, a senior manager of business development. ''We generally talk about different deals or get updates on day-to-day activities.'' Leave it to Yahoo to lead the way to the talking Net. The giant portal was one of the first sites to add live voices--in addition to typed communications--when it launched the latest version of its instant messaging service last May. Then in October, Yahoo introduced voice in its chat rooms. ''There's this convergence of the old style of communication with the new communication, and we want to play a major role at that intersection,'' says Geoff Ralston, Yahoo's vice-president and general manager for communication services. Hard on Yahoo's heels, rival portal Excite (ATHM) rolled out voice chat last August and, on Apr. 10, America Online Inc. (AOL) unveiled a me-too phone service in the newest version of its Instant Messenger. They'll have to move fast to catch up to Yahoo. Already, the company has talkified Yahoo! Clubs, which are similar to chat rooms and are formed around specific topics such as day-trading, movies, or erotic wrestling. This April, Yahoo unveiled a new version of its Messenger product that allows users to conduct hands-free conversations instead of communicating walkie-talkie style by pressing a talk button on their computer as they did in the past. What's more, the new Messenger has been woven into Yahoo's news section so that people reading a story about, say, the Cuban boy Elian Gonzalez can click on a conversation link and rant away to others visiting that section. ''We want to have the broadest set of communication services out there,'' says Yahoo senior producer Brian Park, who heads the Messenger group. ''And voice is just the next step.'' Cutting-edge corporate users like eFrenzy.com's Garrett are finding plenty of new uses for the services. Garrett thinks voice chat is helping his co-workers become more productive because they can quickly jump from text chat to voice chat to iron out a sticky issue. His company is thinking of letting the buyers and sellers who come to its site for services use Yahoo! Messenger's voice chat to haggle over price or other terms. Garrett figures talking would probably make negotiations move faster and could foster trust between buyers and sellers. Yet there is still a lot of work to do done before mainstream Web surfers embrace the audible Web. Park says voice services tend to be popular with Generation Y teens, geeks, gadgeteers, and New Economy road warriors like Garrett. But most consumers and business users have shied away. That's partly because voice conversations on the Web are hampered by poor security and a snarl of technology issues. The biggest problem is poor audio quality. At a recent demonstration of Yahoo's voice technology, having a conversation proved irksome because the voices were choppy and hard to hear--much like dialogue over a CB radio. ''I don't think the phone carriers have much to worry about,'' says analyst John Dalton of Forrester Research. ''If anyone thinks this is a reliable communications channel they're smoking crack.'' For the time being, Yahoo's voice services are more about creating community than creating commerce. But if Net voice technology continues to improve, voice services could become a critical part of online communications for consumers and businesses. By Spencer E. Ante in Silicon Valley _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Talking Internet TABLE: Birth of a New Communications Network CHART: Booming Voice on the Net TABLE: Telephones on Steroids Yahoo! Look Who's Yakking Away Europe Swoons for Voice-on-the-Net Where the Money Will Be CHART: Investing in Voice on the Net TABLE: Stock Stars INTERACT E-Mail to Business Week Online

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