Instant messaging: feature or product?

Web-based instant messaging services, such as Meebo and eBuddy have had high growth rates over many months. They’ve raked in a lot of funding from hungry VCs. But we see IM becoming a commodity.

So far, these non-aligned startups have offered an advantage. They’ve let everyone communicate with everyone. They’ve aggregated the various IM clients in a single web site, so that someone with GTalk can IM with someone from Yahoo Messenger.

Some, such as EQO, combine communication services, offering mobile IM together with Skype mobile. Meebo and eBuddy both provide widgets in order to integrate services with these other sites. The result: Friends can chat with each other across platforms from a single location, over increasingly multiple formats — IM, voice, email or text.

However, new competitors are launching every week. Today, we’ve reviewed Orgoo, a new company that will soon be launching and integrating IM, voice, email and text into one Web-based platform from the outset. And giants Google, Yahoo, Microsoft and AOL are beginning to offer competing services. They’re integrating their IM services with other applications, and they are working (to some degree) on making their platforms more interoperable.

Here’s a brief summary on how the field looks:

The big fish

Microsoft
Microsoft’s Chief Software Officer, Ray Ozzie, says that software applications of the future are going to have components that are on the desktop, on the web, and on mobile devices. Windows Live Mail now includes the option to initiate a chat using Windows Live Messenger; the company’s IM platform is already interoperable with Yahoo’s.

Google
Gmail has already successfully integrated the company’s IM platform, GTalk, so that its users can chat while emailing. We’ve also heard rumors that GTalk will be integrated with applications such as Google Docs. AOL and Google also agreed to make their IMs interoperable, albeit in a roundabout way — and it looks like this will happen soon. Like Ozzie, Google CEO Eric Schmidt has been stressing the importance of mobile — like Microsoft, Google is integrating apps across platforms. What’s more, 3rd party sites such as Joost are integrating GTalk into their offerings.

Yahoo
The company’s Web Messenger (beta) launched last week — its own web IM service. It integrates with Windows Live Messenger, although without Yahoo Voice (for now, but this is clearly an early beta release). Looks like more integration with other Yahoo! apps will be here soon, such as with with Yahoo Mail.

AOL
Let’s not forget that the IM granddaddy has web and mobile IM services, too; plus the GTalk interoperability.

With the big fish circling, what are the startup minnows to do?

Answer: differentiate themselves through targeting specific, untapped markets. This means continuing to redefine IM.

We covered one startup, called Livemarkets, that integrates IM with online advertising so that customers can interact quickly and directly with salespeople. The company uses the Jabber open standard, and built its own IM technology on top. But as one of its founders told us, “we’re scared to death of Google and Yahoo.”

Last week, we wrote about Mig33, which is also finding its own way with mobile IM, by integrating with other services, such as voice and text:

“[M]ost of its users are using the company’s own IM service, instead of opting to use more popular IM services, such as Yahoo Messenger, Google Talk, or MSN, which Mig33 does let its users choose. More than 75 percent of subscribers are choosing Mig33’s IM services.”

The company is only 18 months old, but has over four million subscribers, mostly in South East Asia — for many, it is their only form of web access, and compliments existing mobile usage patterns in some countries, like SMS in the Phillipines.

The leading IM startups are busy adding functions, too.

EBuddy has launched a mobile IM service. If Mig33’s success is any indication, eBuddy mobile might also do well abroad. It claims to have momentum: 10.3 million unique web visitors and 1 million unique mobile visitors last month. CEO Jan Joost Rueb says the company gets between 60,000 and 80,000 new users on a “good day.”

Meebo has more than 5.5m people using its web service each month but it isn’t going mobile anytime soon, as this terse response to its users’ requests shows.

Beyond voice and mobile IM integration, eBuddy, Meebo and EQO all offer widgets for integrating into other web services (as do a number of other IM startups). Meebo has also worked out special deals with Netvibes and large partners.

But, really, can the small fry survive?

Web-based IM aggregators such as Meebo have also become popular because their web-based offerings bypass school or corporate firewalls that prevent users from downloading IM platform’s desktop clients. How much will this matter, if Google and others offer similar Web-based products, but with more integration with other apps?

Perhaps a good comparison of the risk is what Google did with Google Maps: A number of startups, such as Platial, created new functionality based on data from Maps, then watched as Google decided to do the same.

But if IM is a commodity, maybe other media and tech conglomerates would find a purchase attractive — a popular and fast-growing IM property could help propel overall growth if integrated well with a conglomerate’s other applications.

We haven’t heard any talk of selling, though. eBuddy’s Rueb, for example, said that the company has “too many plans for 6 months out” and it is considering raising a Series B round even though it is already profitable.

The best news now is that all sizes of fish are getting bigger, and so is the ocean of potential users, especially mobile users. The Economist recently wrote about fishermen in India using mobile devices to learn which local markets would bring them the best prices, thereby reducing transaction costs for all involved. Mig33 is already successful in meeting this type of demand, even though it offers competing IM platforms as part of their services.

And let’s not forget the US. When Forrester Research surveyed students ages of 12 to 21 about their most-wanted mobile phone feature, IM was the top choice, nearly twice as popular as mobile e-mail.

(Disclaimer: We’ve mentioned the IM companies, above, as interesting examples. There is a lot more happening with instant messaging than what we’ve discussed here, such as what the MVNO’s are up to — it’s worth noting that Virgin Mobile is going public — or what’s happening specifically in enterprise IM. And we for sure haven’t mentioned Twitter, which more a new form of blogging rather than a direct competitor to IM.)