US Report: McAfee Online - next-generation portal?

Like Yahoo! and Excite, Network Associates -- McAfee Online's parent company -- has millions of users. But where Yahoo!, Excite, Infoseek and Lycos started off as popular search engines, McAfee Online started off hawking PC-management software, including a popular anti-virus line.

In hopes of transforming itself into a portal, Network Associates has begun trying to take advantage of its traffic with a wider variety of offerings. The company has already partnered with Beyond.com to expand the software it offers, and, as first reported by ZDNet, will soon begin offering a search engine and tech information from CNet.

At the heart of McAfee's offerings are the subscription-based products of "Clinic" -- tools which operate within the browser to clean up the user's hard drive and perform other PC maintenance tasks. The Santa Clara, California company believes it is defining a new "smart portal" market, and says its software expertise puts it in a unique position to exploit that market. The smart portal has "a strong client component, and a powerful back-end component," said Srivats Sampath, vice president of worldwide marketing for Network Associates. "We are delivering versionless, self-updating applications through the Web, and we'll take the same metaphor for Web navigation, working on the Web and shopping on the Web."

Sampath said Oil Change, one of the Clinic products, has 1.8 million subscribers, 80 percent of whom are paying customers. The Web site as a whole had a reach of 14.7 million in 1998, according to Media Metrix. "[ McAfee's] got tremendous relationships with millions of people who buy things online," said Barry Parr, an analyst with International Data Corp. "There may be a way to exploit those relationships to sell other things."

Web-based services such as Oil Change are a powerful draw to the McAfee site, but Network Associates also plans to license its products to other portal sites. Part of the deal with CNet's Snap.com, for example, will offer Clinic through the Snap.com site.

But Network Associates' vision of a gigantic new market doesn't necessarily jibe with the facts, analysts said. Portals such as Yahoo! or AOL.com thrive by capturing the lowest common denominator of the online world through the variety of free services they offer. The huge amounts of traffic they draw lead to large advertising revenues. Yahoo!, for example, is one of the few profitable Web businesses.

But "smart portal" revenues come from quite a different source: the fees the site can collect from subscription-based services such as Clinic. And for a speciality area such as PC management the audience is likely to be much smaller. "Everyone's calling themselves a portal. It's, 'I'm a portal, he's a portal, wouldn't you like to be a portal too?'" noted analyst Julia Pickar with Zona Research. "They can call it a portal, but it's essentially a site to service their customers."

But whether or not McAfee Online transforms itself into a portal -- with all the convenient hype that accompanies the term -- Network Associates' manoeuvres seem to make good business sense. "They have customers who come there regularly for information and to get these desktop management software pieces. And if they already have traffic coming to the site, why not add more services to deepen the relationship?" said analyst Alexis DePlanque with Meta Group. "It's a good market opportunity."