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MSN woes open door for IM rivals

Even though Microsoft has claimed victory in restoring its MSN Messenger service, some problems linger--including the opportunity the outage provided for the company's competitors.

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Chris LeTocq, principal analyst, Guernsey Research
Even though Microsoft has claimed victory in restoring its MSN Messenger service, some problems linger--including the opportunity the outage provided for the company's competitors.

On Tuesday, the Redmond, Wash.-based company said the weeklong interruptions to the service had been put to an end. But regardless of the service's status, Microsoft could be cleaning up the mess made by the outage for months to come. And while the company battled its service problems, at least one instant-messaging rival said it has gained converts.

"The most serious ripple effect is that there isn't a ton of loyalty among IM users. This is particularly true for Yahoo and MSN, and a little less for AOL," said Jupiter Media Metrix analyst Nicole Lewis.

Yahoo, for example, reported a 25 percent increase in downloads of its instant-messaging software during Microsoft's outage, with people staying online up to 14 percent longer than normal. AOL, which offers two instant-messaging services--AOL Instant Messenger and ICQ--would not comment on whether it, too, saw increased downloads of its software.

Figures provided by CNET, a software download site maintained by publisher CNET Networks, were less conclusive. All major instant-messaging services experienced a spike in download activity over the July 4 holiday, according to the site.

For example, Yahoo Messenger spiked from 1,595 downloads July 3 to 3,046 the next day and back down to 1,692 downloads by July 7, according to CNET Microsoft, however, also experienced a spike during the same period, from 5,109 on July 3 to 9,571 on July 4 and back down to 5,031 on July 7.

These figures raise the question of whether the spike was simply the result of more users online over the holiday, rather than a reaction to MSN's outage. MSN Messenger customers said that during the initial period of the outage--last Tuesday and Wednesday--Microsoft instructed them to reinstall the newest version of MSN Messenger.

Whether or not MSN users defected, the software maker's larger, longer-term problem may be dissatisfied customers, analysts said. For Microsoft, any defections from its MSN service could make it more difficult for the software maker to convince customers to adopt, and pay, for its future Web services products.

Microsoft plans to put more emphasis on instant messaging--and network reliability--as part of its forthcoming .Net software-as-a-service strategy, which includes an ambitious services plan called HailStorm.

Breaking from its practice with MSN Messenger, which is a free service, Microsoft plans to charge a monthly or annual fee for HailStorm services, which are expected to debut next year.

The troubles with MSN Messenger date to July 3, when many customers began losing buddy lists of friends and, later, service connections altogether. Eventually, as many as one-third of MSN Messenger customers--or about 10 million people--could not use the free service.

Microsoft initially bungled the outage, waiting three days before posting information on the MSN Messenger support page. This drew the ire of many MSN users, frustrated by the slow response to customer concerns.

The end of the affair--or is it?
By Tuesday, Microsoft claimed the problems had been largely put to rest. "The interruptions to the MSN Messenger Service have been resolved," MSN Vice President Rich Bray said. "All customers worldwide again have access to their MSN Messenger accounts."

At the same time, however, he acknowledged that Microsoft could not completely resolve all problems. About 1 percent of customers--or about 300,000 people--have lost their buddy lists, he said.

CNET on Tuesday continued to receive a steady stream of e-mail from MSN Messenger customers claiming that connectivity had not been restored or that service unaffected by the initial outage had been knocked out.

"The statement on the MSN Messenger help page which states 'July 10, 2001/2:45 am PDT MSN Messenger service has been restored to all our worldwide customers' is not at all true," said Jayson Garrett, a programmer and system analyst for Mississippi College. He continues to have no service.

Gartner analysts Robert Batchelder and Maurene Caplan Grey say IM is rapidly becoming an essential business communication tool.

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Patricia Langley, an MSN Messenger user from West Warren, Mass., summed up the sentiments expressed by many of the people complaining of continuing service problems.

"I can't believe this," she said. "My messenger is still not working, and they've had the audacity to post a message today everyone is up and operational?"

Langley, who has been without service since July 4, received an e-mail response from Microsoft on Tuesday that introduced a new reason for her personal service outage.

"During the recent network improvements that we performed on the machine that holds your account, there has been a slight extension of our maintenance routine," the e-mail stated. "This is to fully make our system work efficiently for you."

Several other MSN Messenger users without service for a week or more forwarded similar e-mail responses.

Initially, Microsoft blamed the widespread outage on a disk controller failure. It attributed Tuesday's service problems to a different issue altogether: above-normal network traffic. "The loads are extremely high because of the number of people logging in. But the service itself is fully restored," said Bob Visse, MSN group product manager.

"The problem is with authenticating into service," he explained. "We have seen significant delays for customers being able to log in. If customers continue to try and log in, they're getting in. We're doing everything we can to adjust for that."

Switch hitters
Consumers who downloaded competing instant-messaging software may not necessarily stop using MSN Messenger. In fact, people with Yahoo or MSN usually have more than one IM service on the desktop, making it easy for them to explore or use another service, according to Jupiter's Lewis.

"As of the end of February 2001, we found that 41 percent of MSN users were also using AIM and 24 percent were also using Yahoo," Lewis said. Jupiter Media Metrix based its analysis on active users--people who fired up instant-messaging software over the span of one month.

Garrett, the Mississippi College programmer, said he is "a very casual user of MSN Messenger at best. The only person I communicate my mother, and that's because I set her up with MSN Explorer." He also wanted MSN Messenger for participating in Microsoft's Windows XP Preview Program.

Whether people have defected from MSN Messenger is unknown. But Microsoft's competitors jumped at the opportunity to trumpet recent gains. "We have seen a significant increase in daily downloads of Yahoo Messenger over the period of the last few days compared to the previous week," said Lisa Pollock, Yahoo's director of messaging products. "That increase is 25 percent."

Christine Rivard, an MSN Messenger user from Montreal, said she "would definitely consider switching" because of the outage. "Actually, since the beginning of the problem I've switched back to ICQ and sent mails to my contacts saying they could now reach me there. Most of my friends with restored service now run both ICQ and MSN Messenger, which might end up hurting MSN in the long run."

Going forward, Microsoft faces a challenge in convincing customers that it can deliver reliable instant messaging and related online services, Lewis said.

"What it says is they need to beef up their infrastructure and, more importantly, the customer service aspect of it and their communication to users," she said. "I expect that when the service becomes part of something you pay for that the reliability will improve greatly. But right now, the question to consumers is, what do you want for free?"