Yahoo and Microsoft taking a bite out of the market

Earlier today, Yahoo and Microsoft announced plans to make their instant-messaging services interoperable. We have to see what market leaders AOL and Google will do to counter this move.

Before summer 2006 we will be able to exchange messages, contacts, share emoticons, and make PC-to-PC voice calls between Yahoo Messenger and MSN Messenger users.

Apparently, this has been in the works for some time. It has taken the companies a full year to come to an agreement but, with this partnership, they are forming a joint a user base close to the #1 player, AOL.

Let’s take a peak at the IM landscape by market share:

1. AOL 51.5%
2. MSN Messenger 27.3%
3. Yahoo Messenger 21.9%
4. Yahoo Avatars 1.5%
5. Skype Messenger 1.2%
6. Trillian .9%
7. ICQ Unified Messaging .7%

Source: Nielsen/NetRatings -- US in September 2005

John Delaney, Ovum analyst, was quick to react to the news. "In my opinion, the biggest external driver for this announcement must be MSN and Yahoo's mutual need to defend themselves in the long term against Google. Google is a relatively recent insurgent in these services, but it is clearly determined to grow its presence there aggressively."

No comment yet from AOL on this story, but I am sure we will soon hear from both AOL and Google.

I am a user of MSN Messenger an am looking forward to getting my hands on Microsoft Commander, the Microsoft product which exposes this feature. I hope the industry can eventually agree on an open standard and that we can have our vendors compete on the basis of features and not on where the people you want to chat with have their account.