Turning instant messaging into a gold mine
- Source: Global Times
- [13:04 June 15 2009]
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By Sherman So and J. Christopher Westland
Editor’s note:
This article has been adapted from Red Wired: China’s Internet Revolution co-authored by Sherman So and J. Christopher Westland. The book is aimed at giving readers gain a firsthand understanding of how the Chinese combine successful components from their Western counterparts with innovation, to accommodate the unique characteristics of the Chinese market.
While the rest of the world’s instant messaging services, such as Microsoft Windows Live Messenger, Yahoo Messenger, can only earn tiny revenue from online advertising, China’s Tencent turned its instant messaging platform QQ, into a gold mine.
Tencent has become the most profitable company in the Chinese Internet industry by selling its mostly teenage users a nebulous product. Nearly 70 percent of the company’s revenue comes from “Internet valued added services” – such as avatars, or icons representing users’ identities, virtual pets and online games.
One of the earliest Internet services was instant messaging services or online chatting. It allowed people to send text message to their friends instantly over the network.
The technology was already there even before the public Internet became popular, as many computer science students in the early 1990s could testify. They were using the Unix command “talk” to chat with friends around the world in the middle of long nights spent in computer labs.
But such a world was small – limited to computer students who knew Unix, in other words, tech geeks. In 1996, an Israeli company called Mirabilis made a breakthrough, which allowed online chatting to spread to a wider community. The five founders at Mirabilis built a program that could work on Microsoft Windows – the computer operating system most of the world uses. Mirabilis also designed a nice-looking interface, so that people unfamiliar with Unix commands could talk to their friends and add new friends to their contact lists.
The program, called ICQ, became an instant hit. Millions of people used ICQ, a homophone for the phrase "I seek you", to stay in contact with their friends.
It was such a successful service that AOL, the leading ISP in the US at the time, acquired Mirabilis for $407 million in 1998, even before it could figure how to profit from the business.
Other major Internet companies also launched their competing online chat programs. Yahoo developed Yahoo Messenger and Microsoft created Windows Live Messenger. By 2005, Google also launched a similar service, called Google Talk.