MSN Messenger stays in China. (Photo/CNS)
On Nov. 7, Tony Bates, president of Microsoft and CEO of Skype, announced that, excepting the Chinese market, Microsoft will terminate its Messenger service by the first quarter of 2013 and incorporate its 100 million subscribers into Skype.
One major reason is the plunge in subscribers in recent years, as American youth have gradually switched to Facebook and Twitter for instant communications. With a history of 12 years, Messenger still boasted 300 million subscribers in 2010, now having plummeted to 100 million. Skype, which was acquired by Microsoft at US$8.5 billion in May last year, owns 280 million subscribers worldwide.
The exit of MSN is not the only move of Microsoft in promoting Skype. Microsoft recently announced a new version of Office furnished with Skype.
Microsoft, however, will continue to provide MSN services in China, due to the peculiar nature of the Chinese market, according to Guo Rong, chief of MSN in China.
An engineer at the Google headquarters in Silicon Valley points out that "Skype is absolutely a reliable product but I am not sure what its real edge is, as all mobile communications applications are capable of supporting voice communications, such as China's We Chat. The termination of MSN service can be interpreted as a defensive move of Microsoft, as it tries to consolidate the status of Skype."
Microsoft has also attempted to bring Skype to the living room, as Skype is now compatible with TV sets or gaming consoles, such as XBOX. In addition, Skype is vigorously developing its application in mobile phones.
Microsoft will continue to provide the MSN service in China, due to the complicated shareholding relationship between a MSN joint venture in China, Tom, and Skype. At present, the operation of MSN in China is carried out by the joint venture between Microsoft and a holding firm in China. The joint venture has been endeavoring to push the MSN mobile service in China, with unsatisfactory results, due mainly to its reliance on China Mobile, which, in turn, intends to tap the market itself.
At present, MSN China derives its income mainly from advertisements, including ads on MSN portal, search engine Bing, and IM client premise.
Meanwhile, in 2007 Skype and Tom formed a joint venture in China, with a shareholding ratio of 49:51. In July this year, news erupted that the contract between Skype and Tom will mature and subsequently Tom will lose its agency for Skype in China. Tom immediately released a statement saying that the contract is still effective and Tom will negotiate with Skype for the continuation of the contract before its termination.