* ISPs and portal providers would be better off acting as a channel to Web content
After reading one of our recent newsletters about how ‘Net neutrality will affect companies like Google and Yahoo, a reader asked us if we think trends point to ISPs gaining more control over applications providers.
Here are some excerpts from our reply.
We think that while ISPs or portal providers (like Google and Yahoo) may offer some content – like a spreadsheet or e-mail application – such software would be limited to mass market applications that can be easily supported. For example, we don’t think it is in Google’s business model to offer “Google” interactive video games, but it could offer a nice game of online cribbage or solitaire. Owning applications and content that evolve would be a substantial and unnecessary change in the ISP and portal providers’ business models.
Our reasoning: targeted consumer applications – like the latest cool video game come and go quickly and it takes substantial market savvy to keep up with evolving opportunities. Targeted business applications like CRM systems or desktop applications also evolve and require customer support either through channels or company-direct services.
ISPs and portal providers would be better off acting as a channel to the content rather than be the owner or developer of that content.
We think Google and Yahoo will have bigger fish to fry than trying to control content and applications. They will have their hands full accommodating the evolution of their infrastructure to better accommodate increasing user demand for video content in the near term.
In the long term, we believe Google and Yahoo will also be consumed by trying to figure out how to keep the phone and cable companies from eating into their profit margins when these facilities companies start to charge for “guaranteed” access to content and applications. (This “pay for guaranteed access” model will come soon based on recent federal legislative trends.)
Of course one way to keep the facilities companies out of the profit loop will be to offer hosting of the content and applications – bypassing telco facilities where possible, but we don’t see Google or Yahoo actually owning the content or applications.
Thanks to our reader for a great question. We’d like to hear if you think our views are on target or if you have a different opinion. And if you have a question you’d like answered or a topic you’d like to see covered please contact us at the e-mail addresses below.
