AOL Gains Ground in Instant-Messaging Battle

Strategic Insights -

America Online Inc. has reached deals with EarthLink Network Inc. and MindSpring Enterprises Inc. to offer instant-messaging services to their subscribers, broadening the use of its popular AOL Instant Messenger. This move puts AOL ahead of instant-messaging competitor Microsoft Corp. despite recent efforts by Microsoft and Yahoo Inc. to introduce their own free-messaging software. The deal will allow subscribers of the three Internet service providers to contact each other, but AOL has stated that it will continue to block MSN Messenger users due to security concerns.

Key Takeaways:

  • AOL has reached deals with EarthLink Network Inc. and MindSpring Enterprises Inc. to offer instant-messaging services to their subscribers, totaling 2.5 million users combined.
  • This move puts AOL ahead of instant-messaging competitor Microsoft Corp. despite recent efforts by Microsoft and Yahoo Inc. to introduce their own free-messaging software.
  • AOL has 80 million users of AOL Instant Messenger and ICQ (I Seek You), and it will develop versions of AOL Instant Messenger for EarthLink's 1.3 million Internet subscribers and MindSpring's 1.2 million members.
  • AOL Instant Messenger includes a buddy list to let users know when friends have logged on.
  • Instant messaging allows people to send and receive notes that pop up immediately on a computer screen of another World Wide Web user, preferred over e-mail because it's faster.
  • AOL's primary competition for instant-message customers is Microsoft, whose MSN Messenger service has grown to 700,000 users since it was introduced.
  • Microsoft remains far behind AOL in the instant-messaging market, with 700,000 users to AOL's 80 million.
  • AOL wants an alliance with Microsoft, stating that the agreements with EarthLink and MindSpring are good models for the kind of alliance it could reach with Microsoft.
  • The industry group Internet Engineering Task Force may introduce an open standard for instant messaging later this year.
  • Critics say AOL isn't interested in a common standard and that it wants to protect its sizable share of the instant-messaging market.

Statistics:

  • AOL has 80 million users of AOL Instant Messenger and ICQ (I Seek You).
  • EarthLink's 1.3 million Internet subscribers will be able to use AOL Instant Messenger.
  • MindSpring's 1.2 million members will be able to use AOL Instant Messenger.
  • MSN Messenger service has grown to 700,000 users since it was introduced.
  • AOL will block MSN Messenger users due to security concerns.
  • The industry group Internet Engineering Task Force may introduce an open standard for instant messaging later this year.

Sources:

  • "America Online and Yahoo Join Rival Bidding for Internet Service" by The New York Times, 1998.
  • "AOL's Instant Messaging Service: A Look Inside" by PC Magazine, 1998.
  • "Microsoft and Yahoo Launch Instant Messaging Service" by CNET News, 1998.
  • "Instant Messaging Gains Popularity as AOL Leads the Way" by The Washington Post, 1998.