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Google takes aim at instant messenger-plus-voice market

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Google announced in late August the launch of Google Talk, a new, and—for now—ad-free instant messaging application that will enable Gmail users to connect with the Talk service and talk or exchange IMs (instant messages) with other users for free.

Users can also invite others to use Google Talk by clicking “add friend” in the interface. Those invited will also receive a Gmail e-mail account.

The announcement, which was heavily rumored, marks another indication of the search leader’s intention to expand its business well beyond search, as well as keep pace with its rivals.

“This is yet another foray for Google into becoming a broader media and entertainment play,” said Bryan Wiener, president of 360i, a performance marketing and search marketing company.

Google is still the dominant search engine by a wide margin, according to Hitwise, which released search engine market share data last month. The top three engines—Google, Yahoo! Search and MSN Search—accounted for 93.5% of U.S. searches in July. Google garnered 59.2% of searches. Yahoo! Search and MSN search captured 28.8% and 5.5% shares, respectively, in July.

Yahoo! and MSN already have instant messaging capabilities, as does AOL with its AOL Instant Messenger, the clear IM leader in terms of number of users.

The IM market is growing rapidly. There will be about 816 million consumer IM accounts and another 51 million enterprise IM accounts by the end of the year, according to the Radicati Group, a technology market researcher. Radicati said revenue for the instant messaging market—which includes public IM network providers, enterprise IM vendors and IM management companies—will hit $142 million in 2005 and grow to $365 million by 2009.

Industry watchers said Google’s move into the market makes perfect sense. “IM ties folks to a platform, and that’s what Google is building with Desktop et al. VoIP is another possibility,” said media industry wonk John Battelle in his daily Weblog, John Battelle’s Searchblog.

The bigger picture is that Google, like its rivals, has continued to play to the convergence of text, video and voice that is occurring online in order to persuade users to get all of those capabilities in one place.

“It’s all part of building stickiness,” said Sara Radicati, president-CEO at Radicati. “The battle is on for whoever provides the right mix of services that really attract the customer base.”

The search engine’s rivals extend far beyond the other search engines. That is increasingly the case as news, entertainment and communication come closer together.

“The competition is much broader than just looking at Yahoo!,” Wiener said. Competition includes cable providers, telecommunications providers, traditional and online entertainment companies, along with the major search portals.

“As people’s consumption of media moves further online, Google is making a real play into controlling more of that consumption,” Wiener said.

The challenge for advertisers, he said, is “how do I reach my audience?” There is a lack of clarity at this point, he said, as to how to change the allocation of media dollars.”

“The interesting part of this is not the announcement of Google Talk, because that was predictable,” Wiener said. “It’s where is Google headed, and how are they going to change the way voice, video and text converge in the user’s experience. If history is a guide, this is the first of many product rollouts.”

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