Competitive Dynamics of General Portals

Abstract

The arrival of the Internet offers both opportunities for incremental efficiency gains and complete industry redefinition, presenting new value propositions and hence leading to the emergence of new businesses and industries. One particular case is that of the general portal industry, consistently the most visited sites on the Web. Nevertheless, and despite the ongoing concentration of the market, overall profitability remains low. In this chapter we argue that, although the industry has great potential for value creation, value appropriation in information-based businesses remains problematic. Still, interest in this industry is huge, which is understandable if one analyzes the industry within its online value network. As we show, the horizontal portal constitutes a critical link in this network as it provides a way of organizing content, which seems to be the king of the future, and can capture and canalize the incoming traffic of the Internet service providers. Still, they face a number of hurdles to capture the value they generate and become profitable.