How the mighty fall

So what exactly could have gone so badly wrong, so quickly? Can the blame be laid squarely at the feet of an inept management team with an over bureaucratic support network. Well, not entirely, but they must shoulder the lion’s share of the blame.

Excite@Home is simply a victim of hype over reality. While senior management may be able to bamboozle credulous investors with their talk of ‘synergy’ and ‘leveraged potential’, unfortunately, such talk only has a half-life of about five years – after which the really incisive questions begin.

Sinking ship

For Excite@Home, the writing was on the wall as far back as the middle of 2000.
At that time, George Bell, former chairman and CEO of the company entered into a brash strategic alliance with Mark Schneider, CEO of UPC to merge the two companies’ international operations into what was to be called ‘Excite Chello’.

Unfortunately, before the new relationship could be commercially consumated, it all sadly unravelled as it emerged the UPC couldn’t keep its side of the deal. Without an international market to offset slowing US demand, Excite@Home was beginning to look perilously vulnerable.
However, Hart put on a brave face and blamed the weakening Internet advertising environment. "While it is disappointing that market conditions make it necessary to discontinue certain European businesses, it is important for us to continue to focus more closely on our strengths," she said. "We remain optimistic regarding the growth prospects for Excite UK and Excite Italia, and we will continue to concentrate on delivering value to our shareholders."

Even as recently as March 2001, Excite UK claimed to have made a small net profit for the quarter. However, the competition was fiercest outside the UK. Europe had the big hitters and Excite was being squeezed out of the picture.
With the loss of confidence from Comcast and Cox Communications, Excite's cable backers, the cost base could not fall fast enough in the dying weeks of the dotcom bubble. Despite the recent sale of Excite's Australian assets to Optus, Excite@Home’s business plan had been irrevocably breached and even this firesale was not enough to prevent the company from having to seek Chapter 11 bankruptcy protection, and the current AT&T asset strip.

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Spoils

With regard to the break-up of Excite@Home, of particular interest is the conspicuous omission of its entire content business, its search engine and its portal. Only the hardware has been snapped up by AT&T. Where does this leave the fabled – and increasingly cliched – mantra ‘content is king’?

Such a move per se does not necessarily augur too badly for the industry. Arguably, the last thing AT&T needs just now is to try and shoehorn another content portfolio into its own front ends. Just consider the problems it has already experienced attempting to combine BT's Concert assets into its own corporate multinational services.

Moreover, just because Excite@Homes’s version of broadband provision failed does not mean to say that there is no demand. There is plenty.
But, perhaps, what it does cast doubt on is the wisdom of controlling the content and the delivery networks. In a bull market, such a policy may pay handsome dividends, but when things start to go wrong, a company is doubly exposed.

Casualty?

Of course, the failure of Excite@Home could also possibly be explained by the forcing together of the wildly different telecoms, cable and content cultures. The marriage of cable and telecom management cultures with the more flighty ‘Johnny-come-lately’ mindset of new media content providers was never going to be a match made in heaven. Throughout the ages, engineering-based telcos have always made bad bedfellows with the more commercially focused software and value-added service providers – but it seems lessons are never learned.

Whatever the main reason, Excite@Homes’ demise will soon be nothing more than a footnote in the short history of the twenty-first century’s converging communications industry. As the spheres of influence in TMT (telecoms media and technology) collide like tectonic plates from all angles and directions, it will generate a new communications world order, all together less sexy and less spontaneous – but, undoubtedly, more pragmatic and more difficult than one the board of Excite@Home had imagined.

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