Social Networking vs. Email: The Battle to Be the Core Communications Platform for Consumers

Two Thousand and Eight is becoming the year of redesigns. Earlier this fall, I wrote about the redesign efforts of Web 1.0 portals to stay relevant in the Web 2.0 era. Even sites that helped usher in the Web 2.0 era such as Facebook and MySpace have undergone redesigns this year. The fact is that the Web is evolving into a more social place. To survive, consumer Internet companies must join the movement of becoming open or perish. All of the attention surrounding Facebook, MySpace and Twitter has the other consumer Internet companies scrambling to figure out strategies for retaining their users and keeping them interested and active on their sites. This is why in the past month Windows Live, AOL and Yahoo! have all issued announcements that they will be opening up to third party developers and adding social features to email.
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Consumer email is unsexy these days. That's because Gen Z is using social networking services (SNS) to regularly communicate with friends. Email is still involved in some of these direct messages, but the messages are read and delivered mostly via the SNS platform. Of course, social networking is not just for Gen Z. IDC data shows that more than half of U.S. adults aged 35 to 44 use SNS. IDC believes SNS are not a fad, but a new lifestyle that those who participate already, as well as those that are joining now, will carry with them throughout their lives. SNS have changed the way more than half of Americans communicate online. While today, SNS are about Facebook, MySpace and Bebo, we think the future Internet will be more about what social features and functionality can do for the entire Web, not just about pure SNS.

How this evolution will play out in the mean time will be interesting. The recent announcements of email redesigns hint at a debate among consumer Internet companies over what will be the core consumer communication platform. AOL is placing bets on SNS, while Microsoft and Yahoo! are counting on email. While AOL did in fact launch a new beta version of its email on December 17th, AOL is making more interesting investments in Bebo, the social networking site it acquired nearly seven months ago. Of course, AOL must justify the $850 million it spent for Bebo. AOL announced it is placing a new "Social Inbox" in Bebo to allow users to access email from multiple providers including Yahoo!, Google and AOL on the SNS site. AOL concurrently announced plans to add new features such as feeds into Bebo from outside Web sites, such as social-messaging site Twitter and Google's YouTube video site, and a tool that recommends media on the AOL site based on user preferences and those of their friends. This indicates AOL's strategy of directing users to other AOL properties that are easier for the company to monetize through advertising.

Conversely, Yahoo! puts its chips on email. On December 15, the company announced new social features for a new "smarter inbox" and the opening up of its platform to third-party developers. Yahoo! was the first email provider to make such an announcement, and to announce partnerships with third party applications such as Flixter, Xoopit, RockYou's Family Journal, and WordPress at launch. Yahoo! Mail users will also now be able to manage and share photos from Flickr and access Yahoo! Greetings from their inbox. Yahoo! has hinted at eventually adding applications that allow Yahoo! users to integrate other social accounts such as Facebook and Twitter. A Yahoo! spokesman said the company is not trying to compete with Facebook. However, some of the new key features such as Connections, the home page that features activity updates of these Connections, and Yahoo! recommendations about who users might want to connect with all have the flavor of Facebook.

Yahoo! is not alone with these Facebook-like facelifts, however. Windows Live has launched similar social features for its Hotmail users. The next generation of Windows Live will allow users to also create a network of friends among email contacts who will gain access to a "What's New Feed." This feed will update the user's network about activities the user has conducted on several third party Web sites such as Flickr, LinkedIn, Pandora, Photobucket, Twitter, WordPress and Yelp. While Windows Live has forged strategic partnerships to integrate with these third-party sites, Windows Live has not announced opening up its Hotmail platform to third-party developers like AOL and Yahoo!. Windows Live has opened up Live Search in beta, so we expect it will open up Hotmail and should do so sooner than later to remain competitive.

All of the initiatives by AOL, Yahoo! and Windows Live bring the consumer Internet one step closer to data portability, or the ability for consumers to control, share, and move data easily from one system to another. The redesigns are also part of the larger objective for these email providers to keep users interacting on their properties longer rather than to defect to Facebook or MySpace, which will generate greater advertising revenue opportunities. If AOL, Windows Live or Yahoo! could be a consumer's one-stop-shop for online communications, it would in fact make it easier for the consumer and obviously benefit the owner of the platform. The battle between email and social networking sites over where consumers will spend most of their time has begun. Consumers who can access all of their communication feeds in one place is what they need to be more efficient and what will determine where they spend most of their time.

For AOL, Yahoo! and Microsoft, adding social features to their email platform shows they understand that consumers want to be social no matter where they go on the Web. Yet they need to be careful not to copycat Facebook but to add features only they can offer as major email providers. Email has long been more about utility than SNS, which is why focusing on initiatives that make users more efficient is key. The benefit of social email is that if a consumer is older than say 30, not all of his or her contacts will be on Facebook, MySpace or Bebo. Email providers need to market the fact that consumers can be social with all of their contacts via email and are not limited to the ones who have SNS accounts. Plus, email providers also incorporate calendars to add user efficiency. Everyone wants to be more efficient and most consumers have email accounts, which gives email a fighting chance to be the central place where most consumers go first to be social.

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BY Caroline Dangson
Source：IDC