Microsoft looks to more personalized IM

REDMOND, WASHINGTON - Microsoft Corp. plans to deliver a new version of its popular MSN Messenger client by mid-2005 that will let users create a more customized instant messaging (IM) experience, the company said last week.

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Aside from the user experience, MSN Messenger also has to bring in more money, the company said. Microsoft has yet to really tap the online advertising opportunities in the client, Yusuf Mehdi, corporate vice president of Microsoft's MSN Information Services & Merchant Platform division, said last week at a meeting with financial analysts at Microsoft headquarters in Redmond, Washington.

Microsoft recently reported an operating profit of $121 million for its MSN group in the 2004 fiscal year, the first full-year profit ever for MSN. The company attributed the turnaround in the year ended June 30 to increased advertising revenue overall and a growth in paid search listings. Microsoft expects the online ad market to grow rapidly from $7.6 billion worldwide in 2003 to $19.8 billion in its 2008 fiscal year.

Another way for MSN Messenger to bring in money is to include more services that users have to pay for. Gaming, for example, was introduced recently in the U.S. and will be rolled out internationally in the coming months, a Microsoft spokeswoman said. Users pay a monthly fee for access to a game that they can then play with their MSN contacts.

In South Korea, Australia and the U.K., Microsoft offers avatars, digital renderings of people that users can purchase and dress up to develop an online persona. Users pay a small fee to personalize their avatars with, for example, sunglasses, a boom box, a designer outfit, or a hip hairstyle. Since Microsoft made this service available, millions of avatar transactions have occurred in South Korea alone, the spokeswoman said.

MSN Messenger is one of the most popular IM applications, with 135 million unique users worldwide, according to Microsoft. MSN Messenger users are very active, sending about 2.5 billion messages per day, according to Brooke Richardson, lead product manager for MSN Messenger at Microsoft. "If you look at the global traffic of SMS, on Messenger our traffic is roughly double that," she said.

With the next release of MSN Messenger, Microsoft aims to allow users to further personalize the messaging experience, Richardson said. "Customers like to personalize their experience because they see Messenger as an extension of themselves in the online world," she said.

Avatars probably will be offered in more countries and Microsoft is considering other personalization options such as the ability to create skins for the Messenger client, Richardson said. Skins are already popular for Microsoft's Windows Media Player.

Avatars and skins are features MSN Messenger users request, said Pieter Dom, who runs the MSN Messenger enthusiast Web site "Mess with MSN Messenger." (http://mess.be/.) But users also have more practical requests, such as contact lists that can accommodate more than 150 people, file downloads that can be interrupted and then resumed, offline messaging and the inclusion of MSN Messenger on Windows Update, he said.

Richardson said Microsoft is aware of all these requests and is considering them, except for the Windows Update part. Messenger users will have to continue downloading updates for the IM client separately from updates for Windows, she said.

"Our customers are not only Windows customers and they are also not only Windows XP customers. That is why we have our own update mechanism in place -- we need it," she said.