Yahoo! Plugs In

It seems Yahoo!'s (Nasdaq: YHOO) not willing to be outdone in the world of instant messaging. Last week, Time Warner's (NYSE: TWX) AOL unit announced that it's making greater moves to open up its AIM client to developers, hoping to foster innovative new features. In response, on Tuesday Yahoo announced new plug-ins enabling nifty new features for its own Yahoo! Messenger IM service.

In fact, according to CNET (Nasdaq: CNET), some of these new features result from Yahoo!'s own move to embrace outside developers in order to jazz up its products. Thanks both to Yahoo! and outside developers, Yahoo! Messenger users will be able to use the chat program to track eBay (Nasdaq: EBAY) auctions, see what's hot on Amazon.com (Nasdaq: AMZN), and share wish lists and calendars with friends. In addition, Yahoo! Messenger users can hook into pals' blogs through the Yahoo! 360 service and collaborate on event planning. There's also Internet radio through LaunchCast, souped-up voice capabilities, and ... well, you get the picture.

It seems that Yahoo! has harnessed its users' collaborative power to make Yahoo! Messenger more interesting and dynamic. Although last week's AIM announcement did reveal a few interesting add-ons from outside developers, they pale compared to the impressive laundry list of features Yahoo! now boasts.

As I discussed when I looked into AOL's AIM news last week, recent data from comScore revealed that use of AOL's assorted instant-messaging products combined dropped in May, while Yahoo! Messenger use had increased 15%. Google's (Nasdaq: GOOG) Google Chat has still hardly made a dent with IM users, while Microsoft's (Nasdaq: MSFT) MSN Messenger is the leading instant messaging client abroad. (Today's news from Yahoo! seems suspiciously timely, given increasing talk this week about Microsoft's launch of Windows Live Messenger.)

Given the highly competitive instant messaging field -- where AIM has long been top dog, and Google's recent entry gives IM users yet another option to consider -- it's easy to see why investors might have disregarded Yahoo!'s ability to benefit from IMs. However, this announcement reminds us that Yahoo!, with its formidable base of loyal users, remains a force to reckon with.

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Alyce Lomax does not own shares of any of the companies mentioned.