Portals: the new desktop?

Portal sites are rapidly emerging as a computing alternative to the traditional Windows, and even Mac, desktop. Free email was the first service provided by portal sites that mimicked a standard PC application. As a result of the success of free email, users can now bypass the standard desktop application suite in favor of scheduling software, address databases, and other "productivity" applications found for free on various web sites. Yahoo, Excite, and Lycos, among others, are pursuing this strategy.

And, with the advent of improved bandwidth, there is no reason that word processing, spread sheets, or other functions couldn't be performed through a portal, sources projected. Some TV set-top box providers are already considering designs that offer these PC-like applications. Yesterday's deal between @Home and Excite could be a harbinger of application delivery.

"The portals are pointing the way to the desktop of the future," said Rob Enderle, an analyst with Giga Information Group. "This is going to happen fairly quickly."

The traditional meaning of "desktop" would become a misnomer because an account could be accessed from any device connected to the Internet: Portals would fulfill the computing model of computing promised by the NC.

The portal alternative could also have fairly substantial effects on the industry. Portal companies could, conceivably, find themselves in the precarious role of acting as data guardians, offering "uptime" guarantees and other services currently provided by service consultants and resellers. Hardware vendors could experience a surge in sales for corporate and home servers, while simultaneously finding themselves free of the burden of pre-loading applications on PCs.

Indeed, applications suites, such as those from Microsoft, tend to be bloated, offering too many features and hogging too much of a PC's resources. Plus, there is the small matter of money. Microsoft office applications remain a constant, high-cost component in a world where other component costs are diving. So, this would offer software vendors the opportunity to put value back into already over-sized productivity packages.

Portal gravitational pull
Portals are strategically positioned to offer desktop-like functions, according to observers, since users already gravitate to these sites for most of their information needs on the Net. Portals offer privacy, universal access, and a streamlined registration process.

"It's the natural extension of a portal," said Netscape's group product manager for Netcenter personalization, Eckart Walther.

Users are accessing calendars, address books, and email from portal Web sites like Netcenter and Yahoo already. And unlike traditional software run locally, Web-based applications are accessible from any computer with an Internet connection, and aren't subject to the prying eyes of corporate network administrators--although this could be seen as a big negative for corporations.

"The most obvious advantage of [a Web-based calendar] is that it allows you to be available at any Internet connection--whether you're traveling on the road, at a public access point, or at home," said Steve Watts, president of Anyday.com, a new Web-based calendar and contact management service launching next month at Demo 99. "For small companies that are not networked, the Internet becomes the network."

Additionally, server-based applications are easier to use than typical desktop applications, according to Giga's Enderle.

"One of the biggest complaints about PCs is the complexity and lack of reliability," Enderle said. "By shifting to the server side, you can increase the overall reliability of desktop systems."

With this in mind, some portals are considering offering distributed applications that eventually may rival the basics of office suite and productivity software from companies like Microsoft.

Netscape, already offering calendar, email, and scheduling software via its Netcenter portal, is pursuing distributed communication-oriented applications for its enterprise customers through the re-launch of its Customer Netcenter, set to go live in the next two months, Walther said.

Instead of the desktop, Netscape envisions a "Webtop--a single place where you find all your network information," Walther said, adding that the original version of Custom Netcenter is the fastest growing area of the site. The next version will offer "Weblets--small network applications that reside on the 'Webtop.'"

In a similar vein, AOL recently announced an expanded marketing partnership with speech-recognition software provider Dragon Systems to offer online services which take advantage of Dragon's voice recognition applications.

Other players believe integrating traditional desktop functions into the portal is simply smart marketing. In other words, Web-based applications compel users to return to a site, which drives traffic and advertising revenues. Conversely, this means software applications--once the bedrock of a multi-billion dollar industry--will begin to serve as a way to entice advertisers.

"Everyday we're identifying applications that users do on a daily basis, but they're doing offline--not on the Web, and not even on the desktop, necessarily," said Mark Stoever, group product manager for personalization at Lycos. "We identify those applications and build them in a way that so they're easy to use."

While these large players have garnered most of the attention, start-ups are crowding this space as well. Jump Networks recently announced a portal dedicated to providing customers with free email, calendar software, a contact database, select content, and PDA synchronization.

Competition with Microsoft?
The portals insist that these services do not compete with office or productivity software providers, but analysts disagree. Although Microsoft has more fully integrated the Internet into its Money 99 and Office 2000 applications, the company has been slow to recognize the potential threat posed by the portals to its application business, Enderle said.

"This [trend] cannibalizes Microsoft products, and they've been slow to develop these kind of targeted applications," he said. Microsoft declined to comment for this story.

And what about the PC? Although not likely to slow the never-ending race for the fastest processor or largest hard drive, the increasing reliance on the Internet by consumers may eventually dim the popularity of the systems offering fancy extras.

In fact, PC companies like Packard Bell NEC and start-up eMachines are already enjoying considerable success with $499 and $399 systems that feature extensive Internet resources in addition to the typical software bundle.

"Our strategy has been to load a good set of tools on the system, and extend it through the Internet," said Jack Yovanovich, director of consumer product marketing for Packard Bell NEC. Most PC makers offer a host of Internet resources. "You don't have to have everything loaded onto your system if you can connect to the Internet."

But at least one significant obstacle must be cleared before Web-based applications become a reality for most users. High-speed Net access, the crimp in all grandiose Internet plans, must be addressed before portals can distribute these services on a widespread basis.

Although "the Internet experience is going to be better the higher up you go, even a low end system is very sufficient if you're interested in email and basic [Internet use]. A little more horsepower is not going to help you that much with sending email," Yovanovich said.

What is going to help, and what is also a major hurdle to distributed applications, is widely available high-speed Internet connections. The success of applications distributed via the Internet may depend upon the availability of high-bandwidth access like DSL.

"Providing this type of thing seems to have an affinity for an ISP, because you want something like DSL as a connection mode," said Enderle, who also pointed to service providers like AT&T and America Online as possible candidates for offering server-based office applications.