Investor confidence in the Internet is nothing if not resilient. Despite poor returns on waves of previous investments in online ventures, there is now a feeding frenzy for stocks in companies providing Websites that act as entry points to the Web.
These entry points, formerly called gateways, but now known by the more trendy term "portals", have become hot property in the online world. Formerly acting as mere pointers to other sites on the Web they now increasingly provide content of their own, following the online rule that "content is king".
Undeclared king of these portals is Yahoo!, now one of the busiest sites, drawing more than 115 million page views per day.
Yahoo! recently announced second-quarter revenues of $41.2 million (£29.2 million), with operating profits of $8.1 million. Following the release of these figures Yahoo!'s stock price soared to above $200, up from a 52-week low of $29 1/4.
Now, according to the Gartner Group research company, the combined market valuation of top portal sites Yahoo!, Infoseek, Lycos and AltaVista, is upward of $10 billion. These sites, formerly search engines and archives, initially generated revenues from advertising alone, but are planning to use their own content to generate additional e-commerce revenues.
It's no surprise therefore that Internet providers, telecoms and media companies are moving into the portal market. In June the Disney corporation bought a 43 per cent stake in Infoseek, which has annual revenues of about $50 million. Meanwhile, NBC has taken a 19 per cent stake in Snap, a division of Internet publishers CNET, and Microsoft, not wanting to miss out, has resurrected the MSN (Microsoft Network) brand where it will integrate all its online services. Netscape is concentrating its efforts on its own portal called Netcenter, while Yahoo! has signed a deal with communications giant MCI to provide Internet access for its customers.
The primary aim of portals is getting the maximum number of eyes looking at home pages, as eyes attract advertisers. This, combined with the plan to transform passive viewers into purchasing consumers, garnering commissions into the bargain, has dollar signs ringing up in investors' eyes. Thus busy home pages belonging to browser companies, (Netscape and Microsoft), service providers (AOL), or search engines (AltaVista, Yahoo!, Lycos, Infoseek and Excite) are potentially lucrative portals.
Users are already turning to portals to manage their investments, according to the latest findings by research firm Cyber Dialogue. The survey, published two weeks ago, found that 60 per cent of the Internet's estimated 58 million users were conducting financial activity online, most of them preferring portal sites to online brokerages. A recent report from Connecticut-based Gartner Group analyses the changing role of portal sites. In moving from mere departure points to what the report calls "retentive destinations", it says portals "seek to define the essence of a new media company". It identifies four key interactive strategies as Internet access, commerce, content and community, and says portals are retaining customers through "loss-leaders" such as personalised pages, free web space, free email accounts, chat sites and messaging sites.
According to Patrick Meehan, author of the report, the Web will have a handful of portal sites in about two years time, which will be the online equivalent of today's major TV networks. But portals may not be aiming at the whole Internet community. Internet users with an interest in Irish affairs, for example, are likely to set their home pages to sites such as Irish service providers, newspapers or Local Ireland. Eireann bought a 90 per cent stake last month.
Mr Gerry McGovern head of Internet developer Nua, which founded and runs Local Ireland, equates the site to a national cyber infrastructure which brings together local communities all around the State. He says there were 300,000 visitors per month in April.
As for Nua itself, its core business is boosted by styling its own Website as a "narrow and specialised" portal. By offering online surveys, the site has attracted significant attention around the Web, which in turn leads to Internet consultancy and development business. But Mr McGovern reckons that the biggest portal for online users with strong Irish interest is the Irish Times Website.
Eoin Licken is at elickenirish-times.ie
