The Daily Interview: The Yankee Group's Steven Vonder Haar

When the world of the Internet as a commercial medium emerged from the formless void in 1995, Steven Vonder Haar was there to write the rough draft of Genesis. The tireless Vonder Haar started covering consumer-oriented Internet businesses for the magazine Interactive Week in August 1995 -- the same month that a money-losing company named Netscape Communications went public, whetting the public's appetite for years' worth of Internet IPOs. (Yahoo! (YHOO Quote), by the way, didn't go public until April 1996.)

Steven Vonder Haar Analyst Yankee Group

Recent Daily Interviews

Earnings & Reg FD: Joseph S. Kalinowski, Equity Strategist, First Call/Thomson Financial

Europe's Outlook: Mark Cliffe, Chief Economist for ING Barings

Consumer Products: Analyst William Steele of Banc of America

The Nasdaq's Rise: Brian Rauscher of Morgan Stanley Dean Witter

Bear Signals: Bob Doll, Merrill Lynch Investment Managers

The Financial Sector: Morgan Stanley Analyst Henry McVey

After spending nearly five years writing about business-to-consumer ventures for Interactive Week, Vonder Haar moved on last year to The Yankee Group, a high-tech research and consulting firm. As he continues to pay close attention to Web media, he's started looking at the world of streaming media -- sending audio and video broadcasts over the Internet. Though companies like Pseudo Programs have suffered high-profile setbacks, Vonder Haar is bullish about the concept's ultimate value.

TSC: Over the past few months, a bunch of companies hoping to make a business out of streaming audio or video entertainment over the Internet have failed. Is this the end of streaming video on the Net?

Vonder Haar: By no means. Streaming media has a long and rich future ahead of it. But it's not going to be in the entertainment field. Where streaming media is really going to shine is in business applications -- businesses using either online audio or online video to talk to consumers, or to streamline communications within their own internal networks. What you're going to see is, instead of people sitting around watching music videos or movies online, we're seeing a movement toward what we call "video with a purpose." And that is a focus on productivity-style applications that help people get things done.

TSC: Can you give me some examples of things that people are doing that reflect this promise?

Vonder Haar: You can think of businesses hosting the equivalent of product brochures or even infomercials online promoting their products. This would be something used primarily in big-ticket areas, things like promotions for travel resorts or cruises; perhaps car makers could put videos of their new models online. Even computermakers might promote their products in a multimedia online venue.

In other cases, you could see it as way for companies to streamline the way they handle inbound consumer communications -- the idea that a person would rather tune into an online video to get installation instructions than call an 800 number. You could have a situation where consumers get their information faster, with lower cost to the company providing the information assistance.

TSC: What companies are doing the work that might make this vision a reality?

Vonder Haar: It's not a matter of just posting a video box or serving up an audio clip and letting it stand on its own. Rather, audio and video have to be integrated in the overall Web experience. And so we're seeing a whole range of companies starting to emerge that are weaving audio and video into the traditional Web experience -- rather than just having multimedia stand on its own, helping businesses to present audio and video in formats that incorporate traditional Web applications -- things like online chat, online polling, links to commerce opportunities, links to relevant news stories or reference information.

And so we're starting to see a whole class of companies emerging that are addressing these opportunities, from large well-known companies like Yahoo! and its Yahoo! Broadcast unit, to emerging companies like Virage (VRGE Quote), Digital Lava (DGLV Quote), Evoke [Communications] (EVOK Quote), SeeItFirst, Eveo. There's a whole set of companies blooming on the horizon trying to make this vision a reality.

TSC: What has to be done to upgrade networks so that people will sit still for this stuff? And how large is the critical mass of users you need for this to make business sense?

Vonder Haar: The question that you're asking drives at where we think the low-hanging fruit in this market is. It does reside in that business environment, particularly on internal networks that already have the bandwidth and the common infrastructure to support these types of applications. So, internal applications, things like sales training -- CEO or top-level executive broadcasts to the workforce. You can think of a variety of applications that would apply on the business-oriented side.

In terms of the consumer market, you will have some streaming media companies say they are viable in a 56K dial-up mode, but for this really to get to a point where consumers are comfortable with the video quality they are receiving, you're really going to expect that DSL or cable-modem type connection ... so there is some work to be done yet in terms of the deployment of broadband. The subscriptions to these services are running a little bit slower than some of the telephone or cable companies would have liked. But in many cases that's due to deployment issues rather than demand issues. We really see that as businesses start to develop these types of applications, it casts broadband as a new venue that can deliver a range of media that are not available via traditional television, cable or radio outlets.