Headline Feeds
While AOL, Yahoo! (Nasdaq: YHOO) and MSN vie for the title of most-used Web portal, their true value goes well beyond their ability to capture the most traffic, according to a report from research firm IDC.
The company argues that portals will be measured in the future by their ability to "capture a person’s digital identity" and use the information to deliver enhanced services both to consumers and to business partners.
"Success for AOL, MSN, and Yahoo! depends upon more than the delivery of more page views and the registration of more users," said Richard Villars, vice president of Internet strategies at IDC. "They must create deeper relationships with their subscribers, touch more aspects of their lives, and be more indispensable than any other medium."
Most Valuable Members
The various portals have been warring for supremacy for years, with Yahoo! and MSN taking turns citing traffic data showing one or the other on top, and AOL repeatedly asserting that its online members are the most valuable because of the e-commerce sales they generate.
But Villars told the E-Commerce Times that the quality of visitors, not sheer quantity, might become more important. "It’s not just delivering eyeballs, it's doing so in a focused way that provides additional value," he said. "Portals play a critical role in connecting customers to their purchases and in other ways they use the Web."
IDC defines digital identity as a collection of a user's online addresses, memberships, purchases, preferences and attitudes.
Race Ahead
Today, Villars said, MSN is best positioned to "take the lead." But he notes that -- as in other, more mature industries such as network television and auto manufacturing -- leadership is likely to often switch hands going forward.
"As new distribution deals are struck, new features added, the leaders can change," he said. "But right now, we see MSN as best positioned to capitalize on changes in the industry."
One reason for that is Microsoft's (Nasdaq: MSFT) domination of the desktop market. MSN is also well-positioned to move more of its members to broadband connections more smoothly, thanks to alliances with Verizon and other providers.
"Moving to broadband will change households' relationships with portals," Villars said.
Troubled Times
The portal wars have become especially volatile amid the turmoil at AOL Time Warner, with new leadership vowing to return AOL to its growth glory days and some suggesting that the Internet business should be spun off from the parent company.
But IDC also notes that AOL maintains its lead as the largest Internet service provider,
and has "only begun" to tap into the massive potential vein of content that the Time
Warner entertainment and news divisions make available.
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