Microsoft Corp. and Yahoo Inc. will make their respective consumer instant-message (IM) networks partly interoperable in the second quarter of next year, the companies announced Wednesday.

This is the first such agreement between major providers of this extremely popular online service, which allows users to communicate in a variety of ways, such as text-message exchanges, PC-to-PC voice chats, voice-over-Internet-Protocol phone calls, photo sharing, file sharing, Webcam video transmission and gaming.

However, communications between MSN Messenger and Yahoo Messenger users will be limited to exchanging text messages, PC-to-PC voice chatting, sharing some emoticons and adding contacts from both services to their contacts' list, said Dan Rosensweig, Yahoo's chief operating officer, during a press conference. "We're thrilled to be talking to you about interoperability between Yahoo Messenger and MSN Messenger," he said.

Combined, MSN Messenger and Yahoo Messenger will have an estimated 275 million users, according to the companies. However, America Online Inc.'s (AOL's) AIM service is the single largest IM network in terms of users.

MSN Messenger, Yahoo Messenger and AOL AIM don't interoperate with each other, but there have been ways to get around the problem. For example, Trillian, developed by Cerulean Studios, is an application that consolidates in a single interface IM contacts from a variety of IM services, including those three. While Trillian doesn't solve the interoperability problem, it does prevent users from having to keep an IM buddy-list interface open for each network.

Ironically, MSN Messenger, Yahoo Messenger and AOL AIM do interoperate with Microsoft's enterprise IM system Live Communications Server 2005.

AOL AIM interoperates with other IM platforms, such as Apple Computer Inc.'s iChat, Reuters Group PLC's system and AOL's own ICQ, a sister IM network to AIM.

Like the Yahoo and Microsoft plan, the interoperability tie-ups that exist in the industry between different IM services are invariably limited to a set of features, as opposed to full interoperability where the entire range of features of one service is replicated on another.

In the case of Yahoo Messenger and MSN Messenger, the companies decided to focus on key core features, such as text messaging and PC-to-PC voice communications, and, at least for now, leave out advanced features such as games and photo sharing, Yahoo and Microsoft executives said during the press conference.

They also stressed repeatedly that the hard work for the Yahoo Messenger and MSN Messenger teams begins now, because linking the two massive IM networks will be complicated, particularly since both companies want to make sure users' security and privacy aren't compromised in any way.

However, the two rivals-turned-partners believe the hard work will pay off for them, by expanding their respective IM communities and giving users a much-requested development.

"This is one of those situations where one-plus-one can equal three," said Blake Irving, corporate vice president of the MSN Communication Services and Member Platform group. "We're excited to announce plans around something that we know for a fact will delight our users."

The partnership means Microsoft and Yahoo may have set their eyes on higher advertising revenue based on a larger aggregation of instant messenger users, said John Delaney, principal analyst with Ovum Ltd.

It also may mark a shoring of strength by the two companies against Google Inc., which is positioning itself as a strong challenger with its Gmail Web mail service and new Google Talk IM service, Delaney said.

"I think Google represents a big threat both to MSN and Yahoo, both of whom are based on communication services," Delaney said.

(Jeremy Kirk in London contributed with this story.)

IDG News Service

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