Time Warner's (NYSE: TWX) AOL has been trying a lot of things to regain its lost dominance on the Internet, but it's clear that problems still plague the business. Trying to capitalize on all the growing online trends is an important step in the right direction, but it's apparent that the company still has a lot to do.
On Monday, I reported on AOL's move to let developers dig deeper into its popular instant messaging platform, AIM. According to AOL, its IM platforms, including AIM and ICQ, encompass 43 million users.
Though AOL's still top-of-the-heap in instant messaging, I was interested to find out how use of its IM programs stacked up on a year-over-year basis. I contacted comScore, the research firm that tracks such data. As it turns out, comScore's data for May 2006 shows a 15% decrease in unique visitors from a year ago (for all of AOL's instant messaging programs combined).
It's no laughing matter, then, to consider that IM rivals are taking a bite out of AOL. The data shows that Yahoo! (Nasdaq: YHOO)'s Yahoo! Messenger increased its unique visitors by 15% in May. (It's also worthwhile to note that, just as I have long suspected, Google's chat client is still pretty low on the list.) And what happens when News Corp.'s (NYSE: NWS) MySpace comes up with its own instant messaging client? No one will forget eBay's (Nasdaq: EBAY) Skype, either; it's snapping up users more quickly overseas than here in the U.S.
As I wrote yesterday, comScore's recent research also shows that while AIM may be top dog in U.S. chat, Microsoft's (Nasdaq: MSFT) MSN Messenger is actually the dominant chat client on a global basis.
Which brings us to recent buzz that Britain's BSkyB (NYSE: BSY) and BT Group (NYSE: BT) may be contenders to buy AOL U.K. (although rumor has it that they're balking at the $1.8 billion price tag). While instant messaging is one of AOL's best-loved -- and most successful -- programs in the U.S., the company's had notoriously poor luck at monetizing it. Considering that its IM client isn't nearly so popular overseas, you can see why AOL U.K. is on the block -- and why prospective buyers might hesitate at high price tags.
It's no surprise that Time Warner's still got issues with AOL. Although AOL has been making many smart attempts to regain relevance in the Internet's hottest areas, its increasing competition means the company has much more to do.
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Alyce Lomax
does not own shares of any of the companies mentioned.
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