An unbelievable alliance is slated to be announced tomorrow, according to the Wall Street Journal. Mighty rivals Microsoft and Yahoo have reportedly agreed to interconnect their free services. According to the report, the two Internet giants have made an arrangement that allows consumers who use the two companies’ free communications services, including IM and computer-to-computer VoIP, to be able to directly communicate with one another for the first time ever.
The purported deal is remarkable for many reasons. First, it helps repair the fractured nature of the IM market. Frequent IM’ers either have to run multiple IM engines or lose out on instant communications with those on other engines. Secondly, a combined Yahoo-Microsoft could pose a more formidable competitive force to IM giant and pioneer AOL, which still has the lion’s share of the market.
Yet another big angle on the prospective deal: Interconnected Yahoo-Microsoft VoIP services could ratchet up the already high competitive tension in the IP-based voice market, potentially leeching away some amount of traffic from leading free-VoIP provider Skype and possibly laying the foundation for more elaborate joint VoIP offerings later.
Moreover, Microsoft announced today that one part of its settlement deal with RealNetworks involves sharing music over IM. This deal gives Microsoft a much bigger footprint to push forward music in this regard and gives Yahoo a foot in the online music door.
Finally, Microsoft is supposed to be negotiating with AOL over a merger of those two companies’ online portals. A deal of this depth between Microsoft and Yahoo, the portal giant that AOL is now trying to emulate with its free site, seems to suggest that a Microsoft-AOL combination might not occur for a while.
Cynthia Brumfield at 8:09 PM|Comments(0)
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