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Louis Trumback writes for the The Gen-X Investor web site. You may visit their web site at: http://members.aol.com/stillicho/index.html September 5, 1998
But what exactly is a portal and what are the potential rewards from this cyber experiment? First of all, keep in mind the fact that portals did not even exist a few months ago. Now, in a frenzy similar to a gold rush, major Internet companies are retooling their websites in an attempt to stake a claim to the huge new portal market. In essence, a portal site is considered a web surfer’s gateway to the Net. Surfers go to the portals in an attempt to find everything they are looking for all in one trip. In return, the portal owner gets a slice of any money spent by the consumer. In a funny way it looks like the portals want to become the Wal-Marts of cyberspace! The downside to the portal concept is the inevitable consolidation that will take place. I suspect only a few of the biggest portals will be able to consistently generate large profits. Let’s take a look at where the portal industry will be one year from now. I argue the industry will be segmented into three groups. The first group will consist of the heavyweights: AOL, Microsoft, and Yahoo!. These three Tech leaders will be able to steer existing customer bases to their portals, and keep them there. The second group will consist of established, but relatively unprofitable portals. The strategy for the second tier portals will be to emerge as the leader of the alternative group. This group consists of Excite, Netscape, Infoseek, and Lycos, just to name a few. The third group will exist as small, niche players with extremely loyal customer bases. Third tier portals like Starting point, Northern Light, and Snap will have to offer unique services the big portals leave out. The main strategic goals of these portals is to get bought out by larger media companies or some hail mary strategy to emerge as a leader. Starting Point and Snap have already been bought out. The third tier portals may seem like losers, but they will be the driving force of innovation on the Net. A special
category has to exist to accommodate Amazon.com and
E*Trade. These two companies have an enormous opportunity
to develop into major portal players. Amazon must stay
focused on developing its E-commerce businesses, while
E*Trade will be the portal of choice for finance oriented
web surfers. It very well might happen that one year from
now portals are a thing of the past and an entire new
gold rush is on. In the meantime all we can do is try to
make sense of this dynamic, new media in the hopes of
uncovering a jackpot for investors. [Visit the BizFN.com home page]
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