MSN and Vodafone, a European wireless service provider, plan to link their instant messaging (IM) systems by 2006. The deal is the latest in a long string of MSN efforts to link PC users and mobile phone users via text-based messaging. However, while most of these previous services are subject only to data charges from carriers, MSN Messenger users will pay a fee each time they initiate an IM session with a Vodafone customer.

IM vs. SMS

Based in the United Kingdom, Vodafone owns and operates wireless networks mostly in Western Europe and has investments and partnerships with other companies around the world, including a 44% stake in Verizon in the United States. The company reaches several hundred million customers, some through ownership stakes in other companies, but about 108 million in its wholly owned subsidiaries.

Like most other wireless operators, Vodafone has long offered phone-to-phone text messaging using the Simple Messaging Service (SMS) protocol. In 2001, however, the company partnered with Followap to launch a more extensive IM service called Vodafone Messenger. This service allows Vodafone customers to exchange messages among a wide variety of devices—not only SMS phones but also PCs (using a proprietary IM client) and phones and personal digital assistants (PDAs) with Wireless Access Protocol (WAP) browsers—and to determine their presence status. The sender pays a small fee (about 10 U.S. cents) each time a message is sent.

Vodafone Messenger is now available in nine Western European countries, but the company does not reveal how many of its customers use the service, suggesting that usage pales in comparison with SMS.

Linking Up

In June 2005, MSN and Vodafone announced plans to link Vodafone Messenger with the popular MSN Messenger service (sometimes called .NET Messenger), which has more than 165 million users worldwide. Customers of both services will be able to add one another to their buddy lists and see presence information as though they were using the same system, and messages received when a user is offline will be stored for later retrieval. The service will be available in Italy, the Netherlands, and Spain in summer 2005, with other European countries to follow.

Because the two systems are based on different messaging technologies—MSN Messenger uses a proprietary protocol, while Vodafone Messenger uses Session Initiation Protocol (SIP)—MSN is using Microsoft's Live Communications Server (which also supports SIP) to bridge the gap.

While MSN Messenger is normally a free advertising-supported service, users who want to communicate with Vodafone users will have to purchase packages of IM messages from directly within the MSN Messenger 7 client. MSN and Vodafone will split the revenue according to an unrevealed formula.

Charging users directly is a new tactic for MSN in the mobile space. Over the years, MSN has offered many PC-to-phone text messaging services, which vary depending on carrier, geographic region, and type of device used. For instance, an early version of the MSN Mobile Web site allowed a PC user to send one-way text messages to any phone that supported SMS simply by entering the recipient's phone number. More recently, versions of the MSN Messenger client have become available for mobile phones, allowing phone users to establish two-way IM sessions with anybody else on the MSN Messenger network, regardless of the device they're using. However, MSN has never charged users for these services.

The deal is non-exclusive for both companies. If users prove willing to pay MSN to communicate with Vodafone users, MSN may strike similar deals with other carriers. Similarly, if the MSN deal expands the audience for Vodafone Messenger, then Vodafone might strike deals with other IM providers, particularly Yahoo.

Resources

MSN's past efforts in the mobile space are described in "MSN Mobile Deals with Platform Providers" on page 27 of the May 2004 Update; an overview of MSN Mobile services can be found in the accompanying sidebar, "Levels of MSN Mobile Service."

Vodafone is at www.vodafone.com.