Home/ Companies / Lycos, the faded Internet star, takes another shot at stardom

Hyderabad: Lycos was the Google of the online search world in the 90s until it faded into oblivion.

With 33 million visitors, according to audience measurement service Media Metrix Inc., it was the fourth biggest online network in the US in March 2000, with $135.5 million in revenue in the financial year 1998-99. A year earlier, in March 1999, Lycos’ network was accessed by 51.8% of US Internet users, beating 50.8% of rival Yahoo! Inc for the first time.

Now, with Google firmly entrenched as the No. 1 search engine, Lycos is trying to reinvent itself as a wearable tech company.

Over the past few weeks, Lycos hosted events in Hyderabad, Mumbai and Los Angeles to launch two wearable devices—a wristband and a ring, the first of more to come, according to Suresh Reddy, chairman and chief executive of Lycos Internet Ltd. At the same time, the company is pawning household jewellery—the 22 patents it holds—to raise cash for other endeavours.

The waterproof smart band acts as fitness monitor, a sleep tracker and a personal security manager, while the smart ring has limited features—sharing contact information and acting as a personal security manager. Both devices unlock a phone with a simple tap and can be managed using an Android application. Lycos claims it will soon be able to identify a user just by the way she moves— revolutionary if it indeed materializes.

Lycos thinks the moment is right to venture into the Internet of Things (IoT) space because the cost of deploying IoT devices is getting cheaper, and thanks to the buzz around IoT, infrastructure to deploy IoT devices is being built at a rapid pace.

IoT refers to a network of devices that communicate over the Internet. Some of these devices use sensors to cover minute details of life and are designed to give deeper insights, and, in general, make life easier.

Technology researcher Gartner Inc predicts today’s 4.9 billion connected devices will grow five-fold to 25 billion by 2020. IoT services spending is set to increase to $263 billion over the next five years from $69.5 billion in 2015, Gartner estimates. Networking equipment company Cisco Systems Inc. predicts 3.5 devices for every person on the plant by 2020, by which time 50 billion devices will be connected to the Internet.

So upbeat is Lycos on IoT that it put other projects on the backburner to focus on the Lycos Life division. The company spent 64 crore on the consumer-focused IoT division, chief financial officer Y. Srinivas Rao said during a recent earnings call.

“The way the industry is progressing now, the way the industry is changing, we believe that the whole paradigm is shifting," Suresh Reddy said in an interview. “The new paradigm is the Internet will start learning... Us being an Internet company, we get a clear sense that is the direction the whole space is moving."

The ring (priced 3,500) and the wristband ( 7,500) are being sold under the brand name Lycos Life. The company sees a better brand recall for products sold under Lycos label, especially in the North American market, where Lycos was popular at the start of the century.

But it will be a hard sell, said Niraj Dawar, marketing professor at Canada’s Ivey Business School. The number of Internet users has swelled to 3.2 billion today from 280.8 million in 1999, when Lycos was at its prime. That’s 11 times the number of users in 1999. In other words, 91% of today’s Internet users came online after Lycos peaked.

“Today it is a portion of the audience. There are people who never heard of it," Reddy acknowledged. Lycos hopes the products will evoke recall in users in the 35-40 age bracket, even as it targets a broader audience—a mix of old timers plus newcomers. “Our job is to reposition Lycos properly, where it’s accepted by everybody. That’s the important challenge," he said.

It’ll be a difficult task. “They’d have to build a brand practically from scratch if their intent is to reach a wide customer base," said Dawar. “So while Lycos may still be recalled and carry associations for a small niche of Internet users, it is unlikely to still represent a distinct promise or position."

Lycos was quite an Internet phenomenon when it was bought by Terra Networks SA for $12.5 billion in 2000, in one of the biggest Internet deals at the time. Owning marquee properties such as Wired News (the antecedent of today’s Wired news magazine), LycoShop (online marketplace), WhoWhere (yellow pages and people search engine), Quote.com (financial services) and Gamesville (online gaming), besides the search portal, its network was America’s fourth biggest in the Internet space.

Four years later, however, Terra Networks sold Lycos for 2% of its purchase value for a mere $95 million to South Korea’s Daum Communications Corp., which in turn sold it to Hyderabad-based digital marketing firm Ybrant Digital Ltd. in 2010 for $36 million. That’s a remarkable slump in valuation.

Hyderabad-based Ybrant Digital, which traces its origins to an online greeting card website (USAGreetings.com), has since renamed itself Lycos Internet to position itself as an international player. It is now trying to reinvent the brand 20 years after it was incorporated.

“There is a brand recognition Lycos has," said Suresh Reddy.

Lycos was born in 1995 to solve Internet problems of that age. It competed with search engines, Excite, Yahoo (the market leader), InfoSeek and Alta Vista before Google was born, and was one of the first to use spider web indexing (for which it still owns some patents) for text string-based search.

The backbone of most search engines today, a spider is a computer programme that crawls websites simultaneously (much like the legs of a spider), scans web pages, and indexes information according to pre-defined priorities. When a user places a search request, the programme looks up the entry on its index and returns results. Lycos, in fact, was named after Lycosidae, a spider that leaves its web to hunt (instead of waiting for the prey to walk into its web).

“Continuing with the same tradition today we are at the verge of entirely new transformation, new revolution in how Internet is going to be used. And Lycos is again trying to come back and simplify the whole experience, make it easier for end consumers," said Reddy.

Still, Lycos was among the hundreds of brands that went through a rapid lifecycle in the early years of the Internet, said Dawar. “Lycos peaked in the late 1990s, after only a few years on the market, and part of the reason for its demise was that it was unable to retain a distinctive position in the face of competition. The Internet is a very fast-moving environment, and was even more so back then."

The ring and wristband are currently sold on the Lycos website but will be soon available on other platforms. Lycos will soon begin selling them on online retailer Amazon.com Inc., Suresh Reddy said. More IoT products are in the works, he said, without getting into specifics.

Investors are not entirely convinced with the IoT push by the digital marketing firm—two different domains in the online space. “There is no link," said Deepak Tewary, research analyst with SPA Securities Ltd. “This shows the company is not really focused on what exactly they want to do... Suddenly why do they want to jump into Internet of Things? Internet of Things is totally different and a lot of investments are needed in this," he said.

Lycos Internet stock began climbing steadily on the BSE since 4 June, when the company first unveiled the two wearable products. It peaked at 46.35 after the 8 June launch in Los Angeles, and has been on the decline ever since trading at 37.10 on Tuesday.

Coinciding with its IoT push, Lycos has been trying to find buyers or licensees for its clutch of 22 patents, spanning search engine technology and on-line advertising and online gaming. The company has mandated Propeller(y), a Washington DC-based intellectual property consulting firm to find buyers or partners who will license the patents.

Lycos claims its technologies are used in online advertising, ad keywords, search engine optimization, databases, and even IoT and online multi-player gaming.

“Some of these patents could certainly be relevant to IoT, if they have a broad enough claim language that would cover some of the basic protocols that the IoT ecosystem implements," said Efrat Kasznik, president of Foresight Valuation Group LLC, a Silicon Valley-based intellectual property consulting firm.

Because IoT is fundamentally a layer of sensors collecting data and transmitting it over communication networks for analysis, some IoT technologies could be breaching Lycos patents, Kasznik said. Her firm could not analyse the claim language of the patents because the information was not public.

Generally speaking, the older Lycos patents can have higher enforcement value because they are broad enough to cover a lot of products that came after them.

“In some instances, the earlier the priority date on the patent (the date it was filed, which is the beginning of the protection period for the idea once the patent is issued), the more valuable the patent is," Kasznik, who also teaches IP management at Stanford Graduate School of Business, said. Owners of older patents usually enforce a patent’s rights through licensing or by dragging the infringers to court.

Yahoo is similar to Lycos, a company that’s struggling in the market, but has a strong patent portfolio with some early priority dates that’s being monetized through assertion, such as litigation and licensing, Kasznik observed.

Innovate/Protect Inc, an intellectual property firm, successfully sued Google Inc., AOL Inc., IAC Search and Media Inc., and Target Corp. for infringing on two patents it had bought from Lycos. The firms were to pay $15.9 million, $7.9 million, $6.6 million and $98,800 respectively, although Google won an appeal in 2014.

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Updated: 11 Aug 2015, 02:15 PM IST
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