Will Windows Live Messenger Kill Skype?

Or is it simply a VoIP 'me, too'?

By Ed Sutherland | Posted Jun 20, 2006
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Microsoft Windows Live Messenger came out of beta today to join the voice-enabled IM landscape already strewn with AOL, Yahoo and Google. But Skype isn't worried.

Like Skype, Microsoft's offering enables users to make PC-to-phone calls using cordless phones from Motorola, Philips and Uniden America. The phones employ the Windows Live Messenger contact lists.

According to a statement, Messenger Live users can sign up for Verizon's Web Calling service.

Within the IM client, users can purchase prepaid blocks of time enabling them to call more than 220 countries at rates starting at 2 cents per minute.

Along with VoIP, the IM client improved collaboration and sharing tools. Windows Live Contacts allows users to be notified whenever contact information, such as e-mail address or phone number, is changed.

And the new Sharing Folders feature allows files to be distributed simply by dropping an item on a name in the contact list.

But despite the improvements, the upgrade falls short of the goal, according to one analyst.

"The VoIP piece seems to be the most 'me-too' feature," said Joe Laszlo, analyst with JupiterResearch.

Even though Messenger claims more than 240 million users, Microsoft's IM is unlikely to threaten Skype, Laszlo said.

Some even say Microsoft and its competitors want what Skype has.

"Everyone would like to take a piece of the Skype pie," said Will Stofega, VoIP research manager at IDC.

But Microsoft denied it is targeting Skype.

"We develop our services for our customers, not our competitors," said a spokesperson.

Nevertheless, Laszlo doesn't see a radical shift in the IM landscape.

According to JupiterResearch, Windows Messenger is third in most-installed IM applications behind AOL and Yahoo.

IM competitor Yahoo today a new beta version of Yahoo Messenger with Voice, which originally launched last year.

The company introduced more than 20 plug-ins allowing third-party developers to create miniature applications for searching online, collaborating with friends and finding maps.

One allows users to monitor eBay auctions; eBay and Yahoo recently inked a cross-promotion e-commerce deal.

Other plug-ins allow users to view others' calendars, as well as search Yahoo Local and Yahoo Maps. And some are aimed at collaboration, including planning events and viewing blogs.

But although Microsoft, AOL and Yahoo (and to some extent Google) have huge user bases, "they haven't had success making money off them," Laszlo said, adding that they all look at the VoIP arena as a way to monetize IM.

But just as IM players feel the need to keep abreast of any new features offered by their competitors, Microsoft and others are watching Skype, said Laszlo.

Last month, Skype announced it was suspending charging for the use of its SkypeOut service, which usually charges 2 cents per minute when calling within the U.S. or Canada.

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