Battle among Internet portals seen as fight for profits

SAN FRANCISCO -- Internet titans Google, Yahoo, Microsoft and America Online are locked in a fierce battle to win the fortune that comes with the loyalty of computer users, experts said Wednesday.

"There is kind of a land-grab going on," Roger Kay, president of Endpoint Technologies Associates, told Agence France-Presse. "There could be a natural monopoly that goes to the player who has the most muscle, delivers the best service."

US Internet giants are duking it out in four arenas: search, e-mail, instant messaging, and portal services such as mapping and computer telephone calling, according to Yankee Group analyst Su Li Walker.

"Everyone was somewhat in limbo, then Google came out with a search and everyone perked up to improve their offerings," Walker said.

Internet giants are offering disparate free services because once computer users step through a portal, they can be directed to features that produce revenue or be targeted for advertising, experts said.

"Ultimately, advertising business gravitates to the largest eyeball count," Kay said. "You want to be the portal of record so they come to you instead of the other guy."

There is a "head-to-head" between Microsoft and Google, said analyst Matt Rosoff of Directions on Microsoft, an independent research firm.

Google released Google Talk, a combination of instant messaging, computer telephone calling and e-mail, on Wednesday. Microsoft has long offered free e-mail and online talk, according to Rosoff.

Microsoft had its mapping program "sitting around for years," only to rush it online after Google debuted a mapping service, Rosoff noted.

Microsoft launched its MSN search engine in January after "Google showed the way to make money on search" with paid listings, Rosoff said.

"That is one area that Microsoft thinks is potentially very lucrative and fast growing,' Rosoff said.

In an odd reversal of images, Microsoft has become the "gentle giant" and Google the "hard guys" in the portal wars, Kay mused.

The stakes are high, according to Kay, since a portal with 100 percent of the market could could cripple competitors by directing online traffic elsewhere.

"I would say publishers should be concerned," Kay said. "It wouldn't surprise me to find Rupert Murdoch taking a big stake in a portal company."

There is speculation that Google plans a free wireless network covering the United States, according to Rosoff.

"That is crazy expensive," Rosoff said of what such a move. "But, once you've got users in your world, you can track them. There is sort of an Orwellian possibility to it.

A Microsoft executive predicted that annual Internet advertising expenditures worldwide will grow from 17 billion dollars this year to 30 billion dollars by mid 2008, Rosoff said.

There were 185 million Internet users in the United States and another 100 million in China at the end of 2004, said Egil Juliussen, president of eTForecasts research company.

Worldwide, the figure was 940 million and that number should surpass a billion this year, according to Juliussen.

"If a portal could make fifty cents a month from those users, it would add up real quickly," Juliussen said.

Each of the portals has different strengths, and their market shares could depend on how they tailor services to different countries, Juliussen said.

"I don't see any knockout punch by anyone," Juliussen said. "It will be an interesting battle."

 

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