December 30, 1998 4:00 AM PST

Portal envy hits the scene

The year of 1998 witnessed the outbreak of portal envy.

Everyone that wanted to be anyone on the Web tried to become a "portal"--an industry term that has come to mean any Web-based property that looks like Yahoo and does everything that America Online's proprietary service does.

Such characteristics became a formula: Mix two parts search directory with two parts hosted editorial content and one part e-commerce; then sprinkle spicy perks such as free email, a community builder, personalization, and yellow pages; and out comes a portal.

Trite but true, portals became the first glimpse of a Web strategy that could work, and industry confidence gave birth to many inventive permutations of the word.

When it emerged nearly a year ago, the word "portal" was reserved for search engines that began evolving toward building out more services and hosting more aggregated content. Companies such as Yahoo, Lycos, Excite, and Infoseek continued to attract millions of viewers every day while increasing their ability to draw those who seek information on the Web.

But today the word "portal" can mean just about anything.

In the last year company sites that allowed visitors to surf the Web while researching its products called themselves "enterprise portals." Sites focusing on a singular topic of content began calling themselves "vertical" portals. And companies setting up corporate intranets with snazzy employee pages called themselves "employee" portals.

Such a game of "follow the leader" wasn't wasted, for with the portal comes audience, and in the Internet game, audience is everything.

Those who watched from the wings saw with disbelief as portals attracted new users at a breakneck pace, pulling in millions of users every day and continuing to ink lucrative advertising and e-commerce deals. Once Wall Street sent Internet stocks skyrocketing, many began to realize that the waiting had to end.

Microsoft's much-anticipated entry occurred when it launched its MSN.com site, combining all of its Web properties under one umbrella. Earlier, Netscape Communications redesigned Netcenter from a sleepy corporate home page to a portal-like site.

AOL also redesigned its AOL.com page as well as its CompuServe Web site, and announced during its acquisition of ICQ that it would pursue a multiportal strategy.

Perhaps the most significant signal that the offline world was watching occurred when media giants NBC and Disney acquired significant equity stakes in Snap and Infoseek, respectively. Analysts expect these partnerships to continue in the coming year.

And, as seen last month when AOL acquired Netscape, the high-profile consolidation in this space is not limited to big media companies.

"It has to happen in 1999," said Jupiter Communications analyst Patrick Keane, predicting Lycos and Excite will be two prime targets.

But those tired of hearing the word "portal" may be in for some relief. According to at least one analyst, in 1999 the word will be finally laid to rest. Instead, it will evolve into more broader "networks" with emphasis on commerce, according to BancBoston Robertson Stephens analyst Keith Benjamin.

Portals will shift their strategies toward becoming a host like AOL, instead of their current role as Web junction point. "If you're a portal, you're dead," he said. "Portal suggests that you go there and you leave."

Some companies are already moving in that direction, such as online brokerage E*Trade. The firm launched what it calls its "Destination E*Trade" portal in September, in an effort to attract Web users interested in investing. It opened up the vast majority of its content to all users with the hope that many would sign up to trade--hence the content-to-commerce portal strategy. So far, the service has been successful, having signed up more than 500,000 members since September, with the help of a $100 million marketing campaign.

Like any industry, search directories-turned-portals will have to grow as consumers evolve. The companies will continue to battle it out in a space marked by intense competition for eyeballs and clicks, which will only become more competitive as other companies with deep pockets enter the fray. And the landscape will keep changing.

"As people become more experienced users, people will have less need for an uber-aggregator," said Jupiter's Keane. "People are going to become smarter, and they will have less of a need for people to package content for them."

Snap is a joint venture between NBC and CNET: The Computer Network, publisher of News.com.

 

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