CNET has spent millions of dollars creating one of the most visible presences on the Web. Now, in a gamble it is reluctant to describe in detail even to shareholders, the company is apparently spending millions more to create a package of services and content that will reach users before they ever get to the Web.
Sources close to CNET tell Wired News that dozens of CNET employees and contractors are working under highly secretive conditions to produce a package of software and Web services which can be bundled inside retail products offered by other companies, including Internet service providers and PC-makers.
CNET informed shareholders on Thursday it had spent US$2.2 million on development and marketing expenses related to what the company labeled a "secret" online project in the first three months of 1997. But CNET spokespeople have refused to reveal any details about that project to analysts or reporters, promising to do so sometime during the second quarter of this year.
At least three independent sources close to CNET, all of whom asked for anonymity, have given Wired News detailed descriptions of a secret project which will include a package of services that can be "OEMed," or delivered under the brand names of other vendors. Under the OEM deals, the ISPs or PC-makers could partner with CNET and choose from a broad-based menu of services targeted at a general audience.
Sources describe the menu of services as being organized in a manner similar to the directories offered by Yahoo, or the broad categories America Online uses to organize its forums. CNET's partners could choose to offer any or all of the services to their customers.
As Wired News first reported on Friday, a team of editors and writers at CNET - working on an effort codenamed "Gunsmoke" - have been asked to produce 10-to-15-word descriptions of thousands of Web sites, drawn from a broad range of subjects. It remains unclear whether Gunsmoke and the secret project described in CNET's quarterly results are one and the same. Key members of the Gunsmoke team are working in separate offices, a block from CNET's headquarters.
The company told analysts last Thursday that the bulk of the 70 employees hired by CNET in the first quarter of '97 have been assigned to the secret project described in the company's quarterly results.
On Friday, the first day of trading following its first-quarterly announcement, CNET's share price fell more than 20 percent in Nasdaq trading. It closed unchanged on Monday.
