Microsoft and Yahoo broke new ground yesterday when they announced their respective instant messaging services would be compatible. The deal for interoperability shows a new and concerted effort by Microsoft to get along with its competitors.
These moves make incredible sense and show Microsoft is listening to their customers but this isn’t the only deal announced by the kids in Redmond recently that put them in cahoots with adversaries. Does the Yahoo announcement and their agreement with Real show a softening of tensions between Microsoft and their rivals?
Microsoft has been playing nicer with a few of their traditional rivals lately but the new deal with Yahoo is a major thing. The two have been competitors in many ways, particularly in the portal scene.
The other major news came earlier this week when Microsoft announced their agreement with Real for content on the MSN networks, especially considering Microsoft all but wiped out Real when it came out with the Media Player some years ago.
But Microsoft has definite goals for doing what its doing and it’s not just to play nice. This deal will allow both companies some leverage against Apple. Apple is making a killing right now with their iPod and iTunes. This may give both Real and MSN some leeway.
Microsoft has done some key positioning with their recent announcements. The deal with Yahoo will not overwhelming at first obviously forces one to look at the AOL instant messenger (AIM). Media research firm comScore Media Metrix ranks AIM number one in the instant messenger field with 49.2 million users versus MSN’s 24.4 million and Yahoo’s 21.9 million. This will give both companies some leverage.
While this deal doesn’t network ads, it’s certainly something AOL must keep an eye on, particularly since Time Warner is entrenched in negotiations with Microsoft over a large stake in the AOL brand. Yesterday Google and Comcast put together a joint offer and this ups the ante for Microsoft. The instant messaging deal will eventually force AOL to make some changes because the other two will pick up some steam as a result of this new announcement.
The instant messenger and Real arrangements are important but they also signify something bigger. Microsoft is collaborating extensively with competitors. These collaborations mean the Microsoft is expanding their online content, their potential ad revenues and also their possible customer base.
After the recent restructuring, it seems like Microsoft is easing tensions with some rivals. But in so doing, they’re covering their flanks and sharpening their swords as they prepare to go after other beasts. Microsoft will probably get their share in AOL, and in so doing, they will wound Google severely in both revenues and market share.
What does all this show about Microsoft. It shows a couple of things really. One is that Microsoft listens to their customers. They have one of the best PR machines bar none. They do quality research and they study that research. The customers wanted interoperability for their IM and they got it. Often, Microsoft makes a concerted effort to find out what customers want and need and then they integrate it.
It also shows Microsoft hasn’t lost its touch. Microsoft makes shrewd, surprising moves that comes across as both innovative as well as strong and competitive. The rival many said would be the downfall of Microsoft would be Google. Deals like these may shake up the Googleplex a bit because Microsoft has developed a relationship with one major competitor and working on another. Google may have to start playing a little dirty just to survive.
John Stith is a staff writer for Murdok covering technology and business.
