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Microsoft Throws in the Towel in the Instant Messaging Wars

Written By: P. Hayes
Published On: November 29 1999

Event Summary

REDMOND, Wash. (Bloomberg) - Microsoft Corp., the world's largest software maker, has stopped linking its instant messaging system with America Online Inc.'s instant electronic-mail program, the companies said.

Market Impact

Microsoft has been striving for an open standard for Instant Messaging with AOL that would allow MSN and AOL users to Instant Message or "IM" one another without hindrance. Microsoft developers have been trying to link the two systems as quickly as possible, but AOL developers implement blocks as quickly as the links are created. AOL claims that the blocking is due to security measures, but it is really due to marketing structure. Microsoft's MSN service occupies third place among on line services, while AOL is still number one, with its registered number of users surpassing the 19 million mark.

Due to the lack of a standard, or unwillingness of the companies to reach an agreement, Microsoft has ceased linking the two Instant Messaging systems. The advantage to a linked system, beyond end-user communication, is attraction to the service providers website, which generates sales. AOL's Instant Messenger application, available for download at either www.netscape.com or www.aol.com has, for the time being, won the Instant Messaging war.

User Recommendations

If you are a fan of Instant Messaging, and currently use Microsoft's implementation, you cannot communicate with AOL or Netscape IM users. If you want to maximize your IM capabilities, run both systems in parallel. In order to do this you will need to download AOL's IM application from either site listed in the preceding paragraph. Instant Messaging is here, and here to stay. AOL will gain market share in IM users and in turn, will realize increased sales from their site (probability 90%) While Microsoft has stopped linking, this does not mean that it is permanently out of the growing IM market. In time, a standard will arise, and when it does, count on Microsoft being there (probability 95%).

 
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