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CREATING ONLINE COMMUNITIES:
ISP & PORTAL SPACE
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ISP: The Stakeholders
Users
ISP
Telco
ISP Buys Access Wholesale
ISP Sells Access Retail
Pays Telco for Usage
Pays ISP for Access
$
$
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Consumer ISP: AOL Model
Users
AOL
Local Telco
AOL Sells Access & Value-added Services
User Pays Subscription Fee to AOL
$
$
ISP Controls the Market
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Consumer ISP: European Telcos
Users
TelcoISP
National Telco
Telco Sells Access to Subsidiary
ISP Sells Access Retail
Pays Telco for Usage
$
$
$National Telco Controls Market
ISP may Reduce Fees as they generate traffic for parent Telco
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The Free ISP Model
Users
ISP
Local Telco
Buys Access Wholesale ISP
Provides Free Retail Access
Pays Alternative Telco for Usage
$
$
Alternative Telco
Provides Access Wholesale
Shares Revenue with ISP
Access Becomes Commodity
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Diverging Paths for ISPs
Convert to Portal
Merge with Telco Focus on Corporates
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Portal Business Model
Aggregate Users
Advertisers
E-commerce
Content Providers
Adv Revenue
Transaction Fees
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Portal Categories• Horizontal Portals: Major Consumer portals
targeting the widest possible audience Yahoo!, AOL, Excite, Lycos
• Vertical Portals: Industry Portals: Sector specific, targeting
businesses for information, jobs Affinity Portal: Targeting specific segments
with common interests: iVillage or women.com for womenAutomall.com for car enthusiasts
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Global Portals Emerge• Three Portals Dominate US & Europe:
Yahoo AOL MSN
US companies have successfully reproduced their business models in Europe
Yahoo largest portal in Europe, in the top two in three largest markets
National portals leader in their markets only
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Industry Portals
• Targets a particular
industry, providing
information and dialogue platform
• Revenue from focused advertising
• Brings together the community and controls future transactional B2B initiatives
• Vertical.net has 57 communities now
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Financial Portals
• Mainly for consumers
• Aggregate information
from financial product providers
• Product category bases content management
• Revenue Model: Referral feeTransaction fee
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Corporate ISP
• Value-added services in addition to access
• Custom pricing instead of commodity
• Common Services: Web hosting: Design, Corporate brochure, e-
mail Co-location: Server/Router housing &
maintenance
• Next Step: Application Service Provider
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ASP Model
• Evolution of IT outsourcing; one standard application is used by many customers
• Benefits to UsersLower Hardware costsSoftware rental instead of s/w licence & upgradesSave on hiring & retaining IT staff
• Drawbacks:Integrity & Security of DataReaction of Software Vendors:
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Players in ASP Space
CORPORATESISP Telco
IT Services
Software Co.Oracle, Microsoft
IBM, EDS, CSC
PSINet BT
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ASP Categories
• Generic Service ASPs: Offering ERP or Microsoft office
• Specialize in Vertical Sectors: Offering sector-specific applications, such as Retail or Financial Services
• Specialize in Horizontal Services: Offering e-commerce applications