IM Race Heats Up: Yahoo!, MSN Gaining Ground

By Ryan Naraine

The three-horse race to dominate the instant messaging space has picked up the pace with a new report by Jupiter Media Metrix that says Yahoo! and Microsoft gained ground on frontrunner America Online.

The report by the New York-based Internet research firm found that the real-time text chat products offered by Yahoo! and Microsoft were aggressively increasing their total reach and usage minutes.

Microsoft, which has marketed its IM product as a key ingredient in the new Office XP operating system, showed a 94 percent jump in IM users from a year ago while Yahoo! saw gains of 25 percent.

However, even the combined growth of Yahoo! and Microsoft IM usage could not knock the instant messaging crown off AOL Time Warner’s head.

Spurred by dramatic growth in IM usage at the workplace, the report found that America Online’s AIM and ICQ products, which both offer real-time and file transfer capabilities, jumped 21 percent from a year ago.

The report, which distinguished between IM usage at home and in the workplace, found that AOL was winning both races. At home, it found that 41.7 million instant message users were using AOL’s platform. Microsoft totaled 18.5 million while Yahoo was being used by 11.9 million.

In offices, where workers are doubling their use of IM as a communication tool, the race is closer with AOL totaling 8.8 million users, followed by Microsoft with 4.8 million and Yahoo with 3.4 million.

Because there is no interoperability among the competing platforms, Jupiter Media Metrix also reported an increase in cross-usage. In September this year, 29 percent of IM users at home used at least two competing brands, up from 24 percent in September 2000. At work, 23 percent of users were running at least two competing brands, up from 18 percent in September 2000. The percentage of AOL users that used a competing brand was 30 percent; 44 percent for Microsoft; and 59 percent for Yahoo.

“Instant messaging demonstrates the power of a network effect, where the value of the network grows as its membership increases,” said David Card, vice president of Jupiter’s research arm. “But as AOL continues to block competing messaging technologies, users are taking things into their own hands by using multiple services.”

The value of AOL’s IM community can’t be measured simply by marketing opportunities or technology adoption. What everyone’s fighting for is a shot at using Buddy Lists and presence management as the hub of future cross-media communications services,” Card added.