© 2003 umfk. 1-1 internet business models the five forces of portal competition tony gauvin
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© 2003 UMFK.
internet business models
The Five Forces of Portal Competition
Tony Gauvin
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© 2003 UMFK.
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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© 2003 UMFK.
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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© 2003 UMFK.
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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© 2003 UMFK.
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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© 2003 UMFK.
Bargaining Power of Suppliers
• High Salary employees
• Consolidation and branding of suppliers– News– Stock quotes– Personal content (horoscopes)
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© 2003 UMFK.
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