KEY POINTS:
The opening shots of the web portal wars in New Zealand have been muted as internet giants Microsoft and Yahoo quietly bed in new relationships based on Australian media tie-ups.
The XtraMSN portal that has been the default start page for tens of thousands of Kiwi web surfers, attracting more than three million visitors a month, will now serve to channel users in different directions based on their web loyalties.
From today, the six-year-old Telecom and Microsoft joint venture is no longer, with the users invited to go to either YahooXtra.co.nz or Msn.co.nz.
Yahoo brings popular services like webmail, search, instant messaging and its Flickr photo-sharing service to the new portal, while local news, sport and entertainment content will be managed in conjunction with Yahoo7, an Australian joint venture between Yahoo and the Seven Network.
Microsoft has allied its new portal with existing Australian website Ninemsn.com.au and the local arm of Australian publisher ACP Media, which owns a stable of magazines including Metro, NetGuide and Autotrader. Content from the magazines will appear on Msn.co.nz as well as Microsoft's popular Hotmail and MSN Messenger services and the MSN search engine.
MSN would appear to have the upper hand when it comes to user "stickiness" - the ability to keep customers browsing the portal.
"One in every four New Zealanders has a Hotmail account and there are 300,000 Messenger users," said Microsoft New Zealand managing director Helen Robinson.
Around 850,000 Kiwis access Yahoo search and the Yahoo7 portal each month. Yahoo seems to be better featured, offering users the ability to upload videos and create personalised playlists on Yahoo Radio.
In New Zealand for the launch of YahooXtra and the maiden board meeting, Yahoo7 chief executive Ian Smith said today would prove to be "election day" for the two web portals as people chose which one to set as their default web page.
"We've pretty high expectations that the majority of people will go down the YahooXtra path," he said.
"We have an unbridled ambition to be number one in the market in terms of advertising and revenue."
Yahoo has the upper hand over Microsoft when it comes to internet searches but is dwarfed by rival Google, which is responsible for around 60 per cent of searches globally. Yahoo accounts for around 20 per cent and MSN 10 per cent.
Smith expects most revenue from YahooXtra will initially come from display advertising but that search-related advertising will play an increasingly important role. Yahoo hopes to have its new search advertising platform, Panama, in use in Australia and New Zealand by mid-year.
Robinson said it was "early days" for search-related advertising.
The Seven Network will have a 51 per cent stake in YahooXtra, with Telecom holding the rest. Three Telecom executives will sit on the board.
