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© 2003 UMFK.

internet business models

The Five Forces of Portal Competition

Tony Gauvin

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Porter’s 5 Forces of Competition

• Bargaining power of Buyers

• Intensity of rivalry

• Threat of substitutes

• Bargaining power of Suppliers

• Threat of new entry

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Bargaining Power of Buyers

– Buyers• Low switching costs

• Little product differentiation (must be free)

• Sticky services

– Advertisers• Portals is only one of many medias

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Intensity of Rivalry

• Fierce Rivalry due to consolidation threats

• Imitation is easy

• Assumption that only a few will survive

• Late comers spending Big Bucks– Disney, Microsoft, NBC

• Hugh market valuations determined by “reach”

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Threat of Substitutes

• Any other media– Newspaper, magazines, TV

• Vertical Portals

• Manual bypass (more savvy web users)

• 2nd Generation broadband portals

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Bargaining Power of Suppliers

• High Salary employees

• Consolidation and branding of suppliers– News– Stock quotes– Personal content (horoscopes)

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Threat of new Entry

• Large sunken costs

• Marketing costs required for branding

• High cost of customer acquisition

• High cost of Talent

• Difficulty finding Partners and content providers