Avinash defines web analytics as:
(1) the analysis of qualitative and quantitative data from your website and the competition,
(2) to drive a continual improvement of the online experience that your customers, and potential customers have,
(3) which translates into your desired outcomes.
and illustrates the changing Mindset like this

more
http://www.kaushik.net/avinash/2007/09/rethink-web-analytics-introducing-web-analytics-20.html
via Jeremiah Owyang