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Google’s Move into IM

The search giant’s new IM product, Talk, is newsworthy – but probably won’t overturn the telecommunications industry. In fact, the recent move by Skype may be more ground-breaking.
August 25, 2005

It was quite a week for Google watchers – which means just about everyone. First, the search-engine giant launched an update to its desktop search tool, called Google Desktop 2. Then the company announced its first-ever instant messaging telecommunications product, Google Talk.

Desktop 2 will be watched closely by companies such as Microsoft – which likes to think it has eminent domain over users’ desktops. But the announcement of Google Talk and its subsequent coverage has eclipsed that product, most likely because Talk is a departure from Google’s primary focus: searching.

How big a departure is it? The initial beta version of Talk, available only to those who have an account with Google’s email service, gMail, doesn’t even feature an Internet search component – something all the major competitors, Yahoo Messenger, AOL IM, and Microsoft’s MSN Messenger, offer. It’s a curious omission, given that Google rose to prominence via its search technology.

America Online is, by far, the current leader in the instant messaging space, with 41.6 million active users, according to comScore Media Metrix. Yahoo placed second, with 19.1 million users, and MSN Messenger had 14.1 million.

Google’s Talk product announcement has also stirred up one of the more popular memes in our culture: the impending doom of the traditional telecommunications industry caused by the growth of voice over Internet protocol (VoIP) technology. That’s because Google Talk features voice capability, allowing users with a microphone and headset to talk with one another. Yet that capability is also offered by the major competing IM products. So banner headlines like the one this week in the Financial Times, “Web giant takes on telecoms rivals,” is quite misguided.

“VoIP is not a threat that’s going to put telecommunications companies out of business,” says Jeff Kagan, a telecommunications analyst and president of The Kagan Group. “VoIP is a change wave, part of a 20-year transformation that the telecommunications industry is in right now.”

That “change wave,” as Kagan puts it, got a little closer to cresting this week – but not from the Google announcement. Skype, the most popular VoIP application anywhere in the world right now – with over 50 million registered users in just two years – will celebrate its two-year anniversary next week. To mark the occasion, it will open up its technology platform, allowing any user to incorporate Skype into their Web pages and applications.

Opening these application programming interfaces (APIs) is a “major step,” said Jeff Pulver, chairman and founder of and creator of the international VON (Voices on the Net) conferences, in a statement.

Earlier this summer, Skype released the API code for its “buddy” list (where Skype users keep their friends’ and associates’ contact information). The move has already spurred a small but growing development community of programmers looking to tie in buddy lists with telecommunications services. (One such service connects Skype’s buddy list to cell phones, so users can call a Skype buddy on their mobile phone.)

Skype’s efforts in opening its code have “raised the bar for everyone,” says Mark Levitt, a vice president of collaborative computing at IDC.

Google also recently released API code for its mapping software. The move has resulted in innovative programs, such as, a mashing of Craigslist’s housing listings and Google map information – which was created by a programmer with no affiliation to either organization.

With Google now officially in the world of voice communications via its Talk product, and Skype furthering its development efforts with API releases, the two company’s strategies are dovetailing nicely.

Here’s a purely speculative scenario: Google recently announced that it will be conducting a secondary offering of stock expected to net the firm an additional $4 billion in capital. Meanwhile, it is rumored that Skype was almost sold to News Corp. for $3 billion. So what if Google bought Skype? It’d be a mega-merger, of course, with enormous implications for instant messaging and communications. And it would also be an announcement that might justify hyped-up headlines.

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