Managing Internet Portals

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Managing Internet Portals

• Jan Damsgaard
• Dept. of Informatics
• Copenhagen Business School
• http//www.cbs.dk/staff/damsgaard

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Internet Portals

• Portals are a World Wide Web sites that
  originally were starting sites for users but they
  have developed into ending points or walled
  gardens
• Horizontal portals focus on general issues and
  include Yahoo and America Online's AOL.com.
• Vertical portal focus on specific topics and
  include Garden.com (for gardeners), Fool.com (for
  investors), and WebMD (for health related issues)

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Portal markets

• If you join the wrong portal
• High switching costs Low network externalities
• The winner is not necessarily better
• Expectations are important
• Control over the installed base of users is
  crucial
• Evolution
• Compatibility with installed based
• QWERTY
• Black and White Vs Color TVs, Intel Processors

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Competing for a prize

• The winner can make extremely large gains
• A monopoly is hard to challenge because of high
  switching costs and network externalities
• Since the prize is so tempting, there is often
  very fierce competition
• which actually sometimes may lead adopters to
  wait and see
• The prize is tempting
• but the contest itself may not be

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Four forms of competition

• Adapted from Besen and Farell (1994)
• Pesky Little Brother
• Wants to join larger and established bigger
  brother
• The Battle of the sexes
• Each prefers its own, but also prefers
  compatibility
• Tweedledum and Tweedledee
• Firms prefer to compete
• and Avoid Pesky Little Brother aka Big Brother
• Wants to stay solo

Besen, S. M., Farrell, J. (1994). Choosing How
To Compete Strategies and Tactics in
Standardization. Journal of Economic
Perspectives, 8(2),117-131.
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Tweedledum and Tweedledee

• Tweedledum and Tweedledee agree to have a
  (standard) battle
• Building on early land
• Attracting the suppliers of complements
• Product pre-announcement
• Price commitment

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Battle of the sexes

• Both agree that there should be only one!
• Possible outcomes
• Agreement, industry standard, persuasion
• Adoption of a hybrid standard
• Commitment to joint future development

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Pesky Little Brother

• Firms are asymmetric
• One firm has
• an installed base, a good technology, and a
  powerful reputation
• Three cases
• Nothing can be done to prevent compatibility
• Asserting intellectual property rights or
  changing technologies frequently
• Partial compatibility (Apple running DOS)

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Content phase

• Focus
• In the content phase the focus is for the portal
  to attract customers to the portal and sample its
  services.
• Degree of lock in
• Low
• Strategy
• Marketing 
• Stance towards competitors and established
  networks
• Pesky little brother
• Key part of the organization
• Marketing department
• Crisis to handle
• Get users to return

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Community phase

• Focus
• In the community phase the focus is for the
  provider to facilitate the building of a
  community that exhibit high network
  externalities.
• Degree of lock in
• Moderate
• Strategy
• Build community out of users
• Stance towards competitors
• Battle of the sexes
• Key part of the organization
• Sales department
• Crisis to handle
• Build a critical mass of users

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Customization phase

• Focus
• In the customization phase the focus is for the
  portal to make the customers adopt and use a
  service that is owned/controlled by the provider
• Degree of lock in
• High
• Strategy
• Bundle open with proprietary services. Extend
  open services.
• Stance towards competitors
• Tweedledum and Tweedledee
• Key part of the organization
• Research and development
• Crisis to handle
• Establish proprietary service

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Compatibility phase

• Focus
• In the compatibility phase the challenge is keep
  the evolution going, stay backward compatible,
  and incorporate new services and technologies.
• Degree of lock in
• Monopoly
• Strategy
• Incorporate and embrace innovations. Block for
  gateway innovations.
• Stance towards competitors
• Avoid pesky little brothers
• Key part of the organization
• Market researchers and RD
• Crisis to handle
• Avoid revolution

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Overview of PMM
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Healthcare portal Netdoktor.dk Netdoktor.se Verkkoklinikka
Country Denmark Sweden Finland
Date when launched 1998 1998 2001
Number of fulltime employees 30 2 3
Horizontal, vertical and geographical scope Scope Vertical Geo Local Scope Vertical Geo Local Scope Vertical Geo Local
Type of services Health related information Health related information Health related information
Usage Number 1 in healthcare portals Number 1 in healthcare portals Number 1 in healthcare portals
Community 3 communities 2 communities, 200 discussion groups 61discussion groups
Competitors Duopoly in the market Almost a monopoly Duopoly in the market.
PMM phase Phase II Phase II Phase II
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Mobile portal Jippii Telia Mobile Mobilstationen
Country Finland Sweden Denmark
Date when launched 1999 1999 2000
Fulltime employees 14 6 3
Scope Scope Horizontal Geo Local Scope Horizontal Geo Local Scope Horizontal Geo Local
Type of services Nicknames, ring tones, logos, games, etc. Mailadapter, ring tones, logos, games, MMS, etc Ring tones, logos, games, and MMS
Usage Third most visited One of the leaders Not among top 50
Community 20 gaming groups, 13 chat rooms and 70 discussion groups No community No community
Competitors About 4 strong competitors. None, since it mainly provides services to existing customers None, since it mainly provides services to existing customers
PMM phase Phase II Phase I Phase I
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Building a community

• Traditional wisdom
• Build the community wide to increase the
  likelihood of including someone that will be
  active in building the community
• However it is far better to be more to a few
  people than little to many people
• Club theory
• The more member the less the perceived value of
  active participation

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Managing the community

• Traits of an online community
• Roles - from new comer to old timer
• The membership life cycle
• Leadership and managing leaders
• Official and unofficial
• Etiquette
• Events
• Rituals
• Subgroups clans, clubs and committees
• All these will evolve regardless of you being
  active in inscribing them or not

A. J. Kim Community Building on the Web
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Challenges

• Mobile communities
• threat or opportunity
• Ad hoc communities
• Smart mobs
• Access technologies
• Network WLAN, UMTS, DVB etc.
• Gadgets PDA, Mobile phone, TV etc.
• What is the real value of Internet portals
• Historical examples of Radio and TV