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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