Google, Yahoo Messaging May Help Drive Growth
Instant messaging, a tiny cog in the new alliance between Yahoo Inc. and Google Inc., may turn out to be a large motor of growth in the long term and make the companies best friends.
While instant-messaging services don't generate much revenue, they serve as guideposts directing users to various Internet portals. Google's push to make Yahoo's more popular Messenger work with its own lagging Google Talk demonstrates the importance placed on the feature. Instant messaging, or IM, is seen as playing a key role in the battle for eyebaalls in the mobile arena.
"In the mobile story, instant messaging will be more important," said Michael Wolf, an analyst at ABI Research. "Right now, it's a fuzzy business proposition."
Much of the attention around the partnership announced last week between Yahoo and Google has been focused on a search-advertising pact between the two Internet giants. But as part of the deal, the two agreed to allow users of their competing 1M services to communicate with each other.
It was seen as a minor victory for Google because usage of its IT service falls well behind its more established competitors. In terms of audience reach, Yahoo holds slight lead with 23% of users surveyed by research firm IDC. AOL, unit of Time Warner Inc., trailed closely with 22% of users, while Microsoft Corp.'s MSN Messenger was at 18%. Google Talk reached 5% of users, according 1 IDC.
Google Talk already works with AOL's Instant Messenger. Microsoft's MSN Messenger, meanwhile, can interface with Yahoo service.
Analysts say that, in general IM services generate relatively little revenue. Users see ads in the lists of "buddies," and are sometimes hit with ads when loggir into the services. But down tl line, analysts say, Internet portal will likely be able to better target ads based on monitoring ho their users access such services
But portals must walk a fine line in making sure their targeting doesn't violate users' privacy feature on Facebook that broadcast a users' purchases to friends received heavy criticism when was launched.
By: Roger Cheng
Wall Street Journal; June 17, 2008
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