Portal leader Yahoo is poised to stay on top, provided that the company continues to improve its search-engine technology, focus on key markets and develop a site that Internet users want to linger at rather than leave, according to analysts.
Given that research indicates that 39 per cent of Internet users visit Yahoo and that the company has managed, despite tremendous stock market turmoil, to stay focused on its goals, it is unlikely to be overthrown as the portal champion anytime soon, analysts from market researchers International Data Corporation (IDC) and Gartner Group said on Wednesday --a day after Yahoo posted strong fourth-quarter earnings.
Gene Phifer, a research director at Gartner Group doesn't expect Yahoo to sit back and enjoy the fruits of a good fourth quarter, which found the company with a net income of US$18.5 million on revenue of $76.4 million, compared to a loss in the year-ago quarter of $1.9 million on revenue of $26.6 million.
While Phifer views other portal sites like Lycos and Excite as Yahoo competitors, Barry Parr, director of Internet and e-commerce strategies at IDC, identifies only one serious threat: America Online (AOL).
"And that's it," he said, though he also thinks that Lycos and Excite are "kind of in play" to give Yahoo a run.
Phifer also included AOL, the world's largest Internet service provider with 15 million subscribers, on his list of those "nipping at Yahoo's heels", but also finds that that might work in reverse. Yahoo wants also to be an online service, and a free one at that.
Advertising is one growth path for Yahoo. "While there have been a lot of bumps along the way, advertising on the Internet is going to become important, and it will be driven by e-commerce," he said, noting that he expects more e-commerce activity from Yahoo in the near future.
Both he and Phifer anticipate that Yahoo will sign a deal with a media company. Parr in particular emphasised that forecast, suggesting that Time Warner or News Corporation might be likely partners.
In the meantime, Phifer said that Yahoo will keep working on improving its technology to make information on the Internet easier to find. Agent technology and artificial intelligence are two areas the company will continue to work on with the goal of reaching a higher level of personalisation.
Users should also look for incremental improvements in existing services like the calendar, e-mail, chat and the like.