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 Post subject: IT News: Microsoft Scores Big With Yahoo Chat
PostPosted: Fri Oct 14, 2005 5:30 am 
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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

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

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.


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