‘Nateon’, holding on to its first place in domestic internet messenger market ever since it had overtaken Microsoft’s MSN from March 2005, domestic Korean internet markets have shown declining trend for the past year but uniquely, SKT’s Nateon on the other hand has been rising steadily. Combining that with introduction of KT’s ‘U2 messenger’ as another wildcard is getting the attention.

According to report from ‘Korean click’ reflects steady decline in domestic IM market recently. Nateon, MSN, BuddyBuddy, Sayclub, and ‘Daum touch’ all indicate unchanged order of ranks between them.

However, for the past year (June 2005 to May this year) fluctuations of UV (Unique Visitor) revealed that except for the Nateon’s jump (from 11,387,000 to 12,190,000) MSN (from 9,750,000 to 7,040,000) and BuddyBuddy (4,460,000 to 3,570,000) all indicated declining trend for the same period.

[Source : Korean Click]

Shrinking domestic internet messenger market
Due to overall declining market trend Nateon is preparing to release its next version ‘Nateon 4.0’ toward end of the year. To cope with the downward market trend, MSN also released its latest version of ‘Windows Live Messenger’.

However, current third runner-up BuddyBuddy has not came up with any plans to its declining memberships. BuddyBuddy’s edge was in stronghold of teens but with Cyworld targeting many school events, the teens are using more Nateon services. An affiliate from related industry said, “BuddyBuddy tried with Paran and Daum to takeover its operations but both have shown lack of interests.”

Rests of case with Sayclub’s Tachy or Daum’s Touch are in similar situations. Even though Sayclub’s Tachy has remained in market contention, its chatting tool cannot be considered as a messenger service and its UV shows a downward trend too. In Daum’s case, it closed down its messenger team and reduced other application departments to downsize its operations.

Free SMS service offer made creating separate IM market possible.
Fact is current market trend indicates that direct ties to affiliate companies or parent company is crucial to their survival and it cannot be underestimated. The reason behind the Nateon surpassing MSN messenger was in SKT’s (Nateon’s parent company) free monthly SMS (up to 100 Short Message Service) offers too. Additional factor to bring more users in relatively short amount of period also was in offering Cyworld’s close friend management service as an added bonus.

These same findings were reported by TNS (market analysis co.) for the MSN’s messenger usage report. As many as 49 percent of all users who changed their MSN messenger to Nateon said SMS (Text Messaging) was the main factor for the changeover.

MSN, to cope with widening gap with first place, has been offering free text services (up to 30) with cooperation from SKT and just last May it has increased the number up to 100. MSN also started its
Latest IM service ‘Windows Live Messenger’ in hope to attract more users. MSN Korea director Ku-Hwan Lee said, “Keeping the good relationship with major communication company is one of the strategies.”

MSN looking to retake the top with ‘Windows Live Messenger’
Aiming to retake the 1st place, MSN introduced the Windows Live Messenger (WLM) from June 20th. The latest version offers much improved community features and convenience. Personal folders can be shared in between registered users without having to upload or download data and Buddy list search; nicknaming features are also added to accommodate various user preferences.

In addition, soon to be released Korean version of ‘Live dot com’, linking with WLM and iBuddy service with content pack services is part of the strategies to regain the first place.

MSN’s Lee also added, “We lacked behind the Nateon’s SMS and Cyworld’s unified messenger up to this point but Windows Live Messenger also strengthened its features to accommodate its users. We also are concentrating on additional messenger features to increase our chances to regain the lead.”

Will Paran’saU2 get benefit from aftereffect of KT?
In spite of everything else that is going on in the market, sudden appearance of Paran’s IM service with KT’s satellite, wire, wireless internet networks brings much more interesting scenario to the current equation. With the introduction of WiBro service KT and SKT begun on June 30 brings the IM service to another level (not just SMS or MMS but to cope with IT convergence). And for that reason there are good possibilities that IM market will be competed by major communication companies in the future too.

This has a direct relationship with the profitable models for the IM too. Besides the banner ads there aren’t keeping the close tie with the major communication companies can bring more chances to bring up the profit margin. Nateon has immediate plans to start VoIP service with SK Tellink and SKT is looking into start WiBro messenger with Nateon for HSDPA (High Speed Downlink Packet Access) service as its new service to expose more calls and packets through their services.

U2 as a short-term strategy is planning to offer large file transfer services to personal folders without login feature. In addition, for the long term outlook, with KT will offer IPTV’s messenger service and robot tool program to better concentrate on messenger programs.

KT’s U2 project manager Myung-Woon Lee said, “Paran’s U2 messenger is out to be one of the top three in the market and with expecting eventual battle between the big communication companies, it can be considered as double backed plan. With KT and its existing 20 million PSTN telephone service customer base will be used for initial IM customer base.”

Key to gaining users found with Communication Companies
Eventual target of IM competitions are to win over individual desktop users. With Web 2.0 era, we are seeing companies offering various messenger service, widgets, media player, tool bar, security service and other desktop application installations to win over individual desktop users.

Google’s Google talk, Yahoo’s Yahoo widget also fall into this case also. MSN is trying to take over the market with programs that can replace internet explorer; toolbar, opening security center, messenger and media player and outlook that are based on OS basis.

In domestic market, Naver is not relying on its messenger service too much but rather in search engine based toolbar, internal PC search, Naver phone services. Nate offers malicious code removal service with its messenger service and Paran also offers media player and added security services like U2 to win over the desktop users.

Now, with the major communication companies joining in the IM market, we should see more fierce competitions in the future. Internet Messenger service with better features can attract most users but major communication companies that have huge existing customer bases will surely influence the future of the IM market.@