Microsoft puts a price on IM features
By Joe Wilcox
Staff Writer, CNET News.com
September 25, 2002, 1:54 PM PT
Microsoft is prepping a version of MSN Messenger with new features that will be available exclusively to paying subscribers of the MSN 8 online service.
The Redmond, Wash.-based company plans to release the new messaging client, MSN Messenger 5, simultaneously with the launch of MSN 8, which could happen as early as October. AOL Time Warner's America Online unit expects to release version 8 of its online service software sometime the same month. AOL unveiled the latest update for its popular AOL Instant Messenger product, version 5, last week.
Microsoft plans to offer two versions of MSN Messenger 5, one as part of MSN 8 and another as a separate, stand-alone product. But some of the best new features will only be available to MSN 8 customers, who must pay to subscribe to the service. An additional feature would be available exclusively to Windows XP users.
Offering exclusive, paid IM features dovetails with Microsoft's retrenchment of its consumer Web services strategy. Rather than offer a broad set of à la carte services envisioned under HailStorm, Microsoft plans to offer beefed up services to consumers subscribing to MSN 8. HailStorm, later renamed .Net My Services, would have delivered online calendaring, contacts, location and other services over the Web, mainly through MSN.com. Now many of those services will be funneled into MSN 8, which customers must pay to subscribe to.
Like its major rivals, Microsoft will continue to offer a free version of its instant messaging software. Still, the strategy of charging for enhanced features marks a major shift in the world of consumer IM products.
"Historically we haven't seen a tiered approach, where you pay more and get more features," said David Card, a Jupiter Research analyst. "You haven't seen a paid client from the major players like AOL or Yahoo."
If anything, stand-alone instant messengers generally have offered more features than their Web-based or online service cousins. "Ironically, AOL's AIM version is better than the version that comes with the (online) service," Card said.
As the Web matures, some studies have concluded that consumers are becoming more willing to pay for extras such as online content. According to an Online Publishers Association and ComScore Media Metrix study, consumer spending for online content, mainly in the form of subscriptions, rose 155 percent during the first quarter over the same period last year. Real.com ranked No. 1, followed by The Wall Street Journal's WSJ.com. MSN.com placed No. 15 on the list of top 25 Web destinations ranked by consumer content revenue.
With ad sales declining, online giants such as America Online and Yahoo are pushing exclusive content and services in a bid to drive subscriptions. Earlier this month, Yahoo launched a co-branded high-speed access service with SBC Communications with add-ons such as free online file storage. AOL Time Warner has started betting the future of its ISP (Internet service provider) on the creation of high-quality content, following the model of its flagship HBO premium cable TV channel.
MSN goodie bag
One of the biggest features exclusively available to MSN 8 subscribers are enhanced parental controls, which can be applied to online service client and e-mail features.
"There's kind of a differentiation between what people will get with MSN 8 vs. the non-MSN 8 version" of MSN Messenger 5, said Larry Grothaus, lead product manager for the instant messaging client. "If I'm on MSN 8, I'll be able to apply parental controls to MSN Messenger as well."
Parents could use the controls to restrict who their child communicates with. The granular controls could also be applied to specific chat rooms or used to lock out filing sharing and other features. The restrictions would follow the child even to other computers.
The settings are stored up in the cloud, meaning the server backend," Grothaus said. "So if I as a parent set those through MSN 8 and my child goes to a friend's machine and they log on with their ID to a non-MSN 8 machine, the controls will be applied there as well. MSN 8 would act as kind of your control center for those parental controls."
No such controls would be available with the stand-alone version of MSN Messenger 5.
"The parental controls could be really big for MSN," said Paul-Jon McNealy, a Gartner analyst. "Microsoft has done some interesting work with parental controls."
But Card remained skeptical of how much the parental controls would help Microsoft woo subscribers to MSN 8 and the enhanced version of MSN Messenger 5.
"The parental controls are something they've beefed up quite a bit, but we'll see how much people use these things," he said. "Historically people don't use them, except AOL users. That may be a combination of how aggressively AOL markets them and the ease of use of them."
Still, a few MSN 8 features will filter down into the stand-alone messaging client, including a new pop-up information window.
"For customers that are using the stand-alone version of MSN Messenger 5, there will be a version of MSN Today for them," Grothaus said. "Basically, they'll have a customized version that will pop information and links for content they have specified. MSN 8 will have that as an integrated part of the product."
Other new MSN Messenger 5 features include an improved address book, with the capability of sharing Hotmail and MSN contacts. New member directory location features also will be available, as well as flagging buddies who are online using a mobile device such as a cell phone.
Microsoft isn't giving all the extras to MSN 8 subscribers; Windows XP users would see some differences, too. When MSN Messenger is installed on an XP machine, the product gains access to video conferencing and other features not typically available with the MSN version. Those features would not be available on other versions of Windows.
In another big change, "We're going to have co-existence with MSN Messenger and Windows Messenger on XP," Grothaus said. "If I'm running, say, Windows Messenger in my corporate environment, I'll also be able to run MSN Messenger 5 and be logged in as a separate Passport"--Microsoft's online authentication service. "Today, you can't."
That feature also would set MSN Messenger 5 apart from competitors' products, analysts say.
"That would definitely be another differentiator for them," Card said. "But I'm trying to puzzle out what the user experience would look like if you're logged on twice using two separate accounts."
New features on tap that would separate MSN Messenger from its Windows XP cousin again emphasize the benefits for paying customers. CNET News.com observed a recently leaked beta--or testing--version of MSN Messenger 5 on a Windows XP PC. Many new features are not available on Windows Messenger.
For example, MSN Messenger 5 offers a feature called "Browse the Web together" that was not activated in the beta. The client also offers access to the consumer's history of .Net Alerts, which serve up traffic, stock, auction and other tracking information in instant messenger. Furthermore, the contact search appears in MSN Messenger 5 but not in Windows Messenger.
"Most of the features I have described are not going to be in Windows Messenger," Grothaus said of the changes to MSN Messenger.