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MSN and Yahoo to jointly squeeze Tencent's QQ
Last Updated(Beijing Time):2005-11-08 16:59

By Qin Haibo

Despite its dorminant role in the domestic instant messenging (IM) service, Tencent QQ recently becomes uneasy: MSN Messenger and Yahoo Messenger -- its biggest competitor – have announced that the interconnection between their respective products would be realized by the second quarter of next year. Moreover, other instant communication service providers such as Netease, Sina, and Sohu expressed their willingness to join the cooperation.

Instant messenging service is becoming one of the gold mines for the Internet industry as AOL profited in the aftermath of the purchase of ICQ and big players like MSN and Yahoo marched forcefully into this market. Let alone Tencent QQ is already catching on in China.

Instant messenging is an end-user service that permits two people or more than two to pass on instant written information, files, voice data and visual images on the Internet.

"An originally mere communication tool turns out to be an amazing personal space blessed with new contents. You can not only chat with friends here, but also enjoy games, look up for news, experience community life and keep a diary of your own. All your needs for online life are almost done here," said an industrial insider. This also give us an explanation why all the Internet players were keen on instant messenging service market.

Among nearly 40 service providers in the domestic instant messenging service market, Tencent QQ was taking the lead: QQ's registered users exceeded 430 million, among which active users were over 170 million and the record of maximum online QQ users was 16 million with a market share as high as 70%. Coming next was Microsoft's MSN Messenger with a market share of 15% and Sina's UC and Netease's Popo followed with their respective market shares around 5%. Yahoo Messenger, known as having a global user base of 80 million, had not exceled in scale in China.

According to a survey, over 70% of the users expected compatibility between diverse instant messengers. Under such a background, Microsoft MSN and Yahoo Messenger announced that the products of both parties would realize interconnection in the second quarter of next year. Mao Xin, General Manager of Yahoo (China)'s Communications Product Department, revealed that several instant messenger service providers had already made contacts with Yahoo after the news was announced.

So far, Netease Popo users may communicate directly with MSN friends by simply using MSN accounts in the framework of Popo. In addition, Sina's UC, Sohu's Search QQ friends, Taobao's Wangwang, Alitalk Messenger were all on the list to join this cooperation. Mao voiced that with the support of these big players, it was almost a trend to open instant messenging market under the rules of market competition. It was against the need of netizens to close in the market.

Instead of its low-profile tradition, Tencent held a grand ceremony for QQ 2005, a new version of QQ release in Beijing on October 27, which is the first time for Tecent to hold a grand ceremony for the release of a new version of QQ for the last seven years.

From the point of Tencent, there have been no universal criteria in the instant messenging service from the start of invention of this service. It is necessary to set criteria to standardize the market as user needs are becoming more and more prominent and the technology has become more and more mature. "The product sets the criteria. If a product receives wide recognition and leads the trend of the entire industry, it has already become a standard objectively," said Ma Huateng,Board Chairman of Tencent, "In this sense, it is necessary for Tencent to improve itself and win the competition with its product."

As for the cooperation between its competitors, Ma Huateng reckoned that it was difficult for all the instant messengers to realize interconnection. "It involves issues of technology, security and fee conflicts between different providers. It will go into a mess after the two products are connected to each other as different service providers adopt different standards. Security is a concern, too." said Ma Huateng.

However, industrial experts deemed that Tencent was unwilling to join the union mainly due to the economic benefits. Tencent's revenues during the first halfr of 2005 amount to as much as RMB634 million. If QQ is open under no conditions, all the other instant messagers may profit from the user base of QQ. Obviously, it is not with Tencent. Moreover, QQ's free service is the basis of Tencent's other profitable services that have been cultivated with efforts. Once the overall interconnection were realized, users of QQ client terminals are sure to become less loyal to QQ, which will impact such new services that Tencent is now marketing as Commercial TM, online auction and online games. 
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