Microsoft Sends AOL a Message
Taking aim at the heart of America Online’s Internet franchise, Microsoft today will unveil “instant messaging” software, a cross between e-mail and Internet chat that allows users to communicate instantly with a selected group of friends and contacts.
MSN Messenger Service, which can be downloaded free at MSN.com (https://messenger.msn.com) as of midnight tonight, allows users to invite others to join a private chat club, see who among them is online at any given time and send a message that pops up on their screens.
The service, which will also be bundled with Microsoft’s Internet Explorer browser, will offer Microsoft’s equivalent of AOL’s famous “You’ve got mail” message that greets users when new e-mail or instant messages arrive.
Instant messaging software is the fastest-growing service on the Web, with about 80 million registered users, many of whom often spend hours a day chatting with online friends.
America Online, which Wednesday reported that its membership has reached 17.6 million, is the dominant player in the niche with its Instant Messenger software and its “buddy lists,” a version of the software for AOL members. Last year, the company acquired Mirabilis, the maker of ICQ, a rival service, for $287 million to protect its franchise. (The name is shorthand for “I seek you.”) The three AOL systems together have 73 million users.
ICQ and buddy lists are the two leading Web services in consumer use, according to MediaMetrix, a New York-based company that tracks Net traffic. Consumers use the two services more than 11 days a month, on average, compared with just 6.6 days for Hotmail, Microsoft’s popular e-mail service.
But users of AOL’s Instant Messenger or buddy lists can’t message users of its ICQ service, and therein lies Microsoft’s opportunity. The Redmond, Wash.-based software giant developed a messenger service that works with all of AOL’s services as well as those offered by Yahoo and others.
“In AOL, you have these artificially walled-off communities that can’t talk to each other,” said Rob Bennett, MSN’s group product manager.
Bennett says MSN Messenger is far more compact than AOL’s service and can be downloaded in a fraction of the time. Since it is integrated with Microsoft Outlook and Internet Explorer, users can easily send e-mail or an instant message and initiate online video or voice conferences from the same screen.
AOL spokeswoman Ann Brackbill said the company is flattered by Microsoft’s attention. But she warned that “unauthorized” access to AOL members could be “akin to hacking.”
Instant messaging has grown primarily as a social phenomenon allowing people to quickly and simply create their own private chat rooms. But analysts say the service is increasingly used in business and will evolve over time into a fundamental communications tool.
“It’s an essential part of the communications infrastructure that gives you information that doesn’t exist today,” said Jerry Michalski, a San Francisco-based technology consultant who has many of his most important clients on his contact list. “On the telephone, I have to call you before I know if you are available. E-mail is a store-and-forward system. Instant messaging gives you real-time presence information.”
Executives at a company often will use instant messaging to communicate among themselves while discussing a deal with a potential business partner in a conference call. “It’s like you’re in a conference room whispering to each other,” Michalski said.
Microsoft has yet to figure out how to make a profit from the service. But Bennett pictures a day when, for instance, Microsoft might get a cut of brokerage fees when people use the service to buy stocks over the Web using their pagers.
In the meantime, Messenger should boost use of Hotmail, the key driver of traffic to Microsoft’s Internet portal. Messenger users automatically get a Hotmail account.
Naveen Jain, chief executive of InfoSpace.com, which will release its own instant messaging service this fall, sees the technology as a means of tying various information appliances to the Web.
“If you do it right, you should be able to make bids on EBay over your pager,” Jain said.
Although Microsoft’s new services aren’t likely to lure AOL users away in droves, they could reduce AOL’s edge.
“It’s another step that takes away one of AOL’s distinct advantages,” said Barry Parr, a consultant with International Data Corp. of Framingham, Mass. “What was once a cool feature of AOL is now just another function of the browser.”
