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Huge
clout
of Big 3 portals
Four out of five
use AOL, MSN or Yahoo services
By Michael Katz
In theory, to the extent that theories matter on the
ever-changing web, the major portals would begin to fade in importance as
Americans became more familiar with the internet.
Rather than launch each internet journal from, say, Yahoo,
users would go directly to their favorite destinations.
But that appears not to be happening.
Rather, the portals appear to be digging even
deeper roots into the internet population even as users gain in
sophistication.
According to a new study, an overwhelming 84 percent of
U.S. online households rely on the three major web portals, AOL, MSN, and
Yahoo for everyday internet services.
“We wanted to look at how deeply embedded in online households
these portals are, and how it bodes for these companies,” says Rick
Villars, vice president of internet strategies at IDC, a research group.
“We had always gone with the supposition that portals
play a significant role in U.S. households. But we were surprised by the
high percentage of penetration already in place with one or more
portals.”
The report finds Yahoo to be the most integrated of
the major portals, with users leveraging e-mail, customization, and
messaging as part of a seamless service.
Nevertheless, Villars says MSN is in a best position to
improve its position over the next five years, with distinct competitive
advantages over both Yahoo and AOL.
Unlike AOL and MSN, Yahoo doesn’t have the backing
of a large parent with deep pockets, which hurts its chances of becoming
the dominant internet portal.
AOL suffers the disadvantage of its monthly subscription
charge, at a time when its subscriber growth is slowing. Only its instant
messaging service is available at no charge.
In contrast, MSN, while it also sells access
subscriptions, is free to all households to use without paying for access.
“It’s MSN’s game to lose,” Villars says.
But MSN is not without problems.
It is the most fragmented of the web portals, says Villars,
which he attributes to the history of MSN’s construction via
acquisition.
For example, he points out that many Hotmail members signed
up for the e-mail service before it was bought by Microsoft and therefore
may see it as a stand-alone service and not part of MSN.
In terms of both household income and age, Hotmail use is
significantly higher than either My MSN or MSN Messenger in the
lower-income and younger age groups.
Villars says this can be interpreted one of two ways.
“Either MSN has a great opportunity to use Hotmail as a
beachhead for expanding its reach, or MSN is not effectively integrating
Hotmail with its other MSN properties.” he says.
“It is too early to determine the outcome, but
MSN must be sensitive to this variation.”
One of the next steps for the evolving portals involves
migrating their existing customer bases to broadband.
As U.S. internet households increase in uptake of broadband
connections, the portals’ primary distribution relationships will
change, says Villars.
He says they must develop marketing and information sharing
systems that integrate more closely with the broadband companies’ sales,
marketing, billing, and customer care systems.
“Success for AOL, MSN, and Yahoo depends on more than the
delivery of more page views and the registration of more users," says
Villars.
“They must create a deeper relationship with their
subscribers, touch more aspects of their lives, and be more indispensable
than any other medium.”
U.S.
Internet Household Use of Portal Services Service Percentage AOL 38 AOL Instant
Messenger 33 AOL Mail 32 Hotmail 31 My MSN 29 Yahoo! Mail 28 My Yahoo! 23 Yahoo! Messenger 19 Microsoft
Messenger 16 Source: IDC
Q. Have
any household members used any of the following for personal
Internet use at least one time in the past month from home?
August 29, 2002© 2002 Media Life
-Michael Katz is a New York writer.
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