Photo: CFP

Hundreds of China's Internet users have joined an ongoing online campaign dubbed "Save MSN (Windows Live Messenger)" on the country's popular Sina microblog.

"Microsoft's doing almost nothing to improve MSN, so we built a new instant messaging (IM) client two years ago to help MSN users," said campaigner Liu Pengfei, developer of MSNLite, a third-party client technologically backed by MSN. It claims to require less memory and operate faster than the Microsoft product. Liu expects MSNLite users to reach 4 million by the end of 2012.

The incident followed an announcement by Cheng Yizhong, former vice president of Asia Television, on May 23 that his MSN account had been hacked into.

Chen's case is not uncommon in the mainland, where complaints about the Microsoft product are growing.

Wei Shuai, an advertising strategist in Beijing, said he had stopped using MSN since January due to its slow sign-in, weak security management, buggy performance and poor data transfer.  

"MSN used to be neat and simple, while Tencent QQ looks ugly and messy. But things are changing," Wei told the Global Times.

Wei now relies more on microblog chatting, social networking messaging and mobile instant messaging apps.

The biggest shortcomings of MSN's latest version are considered to be its vulnerability to viruses, less advanced user experience and the difficulty of solving technical problems, Guangzhou-based Southern Metropolis Daily reported on May 24 based on a survey of the software's long-term users.

Although MSN is still king among IM clients worldwide, its position in the Chinese mainland market is less strong, industry data shows.

MSN's setbacks in the mainland are just another example of foreign Internet companies' failure in localization, analysts and insiders said.

Market share decline

MSN holds a global IM market share of 40.7 percent, followed by its closest rival Skype with 27.4 percent and Yahoo! messenger with 15.1 percent, according to San Francisco-based software management company OPSWAT.

Other significant players include Tencent QQ with roughly 5 percent and Google Talk with 3.6 percent, said OPSWAT.  

In the Chinese market, however, Internet consultancy Analysys International found that MSN's market share declined from 10.59 percent in 2005, when it first launched in China, to 5.95 percent in 2011, when Tencent QQ topped all IM clients with a 72.97 percent share. Alibaba Group's Aliwangwang had 12.15 percent last year and China Mobile's Fetion had 6.27 percent.

"The contrast is sharp but natural, because instant messaging is one of Tencent's core businesses while Microsoft hasn't been paying enough attention to the demand of Chinese Web users and improving its products and services accordingly," Xiang Ligang, CEO of telecom information portal cctime.com, told the Global Times.

"MSN is not really making the right efforts to maintain customer retention and satisfaction due to product positioning that puts too much emphasis on the so-called high-end users, which ultimately leads to an unclear profit model," Xiang said.

Independent Internet commentator Wang Liyang said Tencent is smarter in terms of consumer insight, with various new products, such as its "virtual currency Q Coin for QQ users to 'purchase' items for their avatar and space."

"Like many foreign businesses in China that voice frustration about the country's market-access problems, Microsoft may have also faced policy restrictions," said Mark Ye, former vice president of social networking site tianya.cn, implying censorship as one of the problems.

There have also been rumors that the company was not allowed to set up servers in the mainland, but both the government and Microsoft declined to confirm this.

Not giving up

However, Microsoft is not about to shut down its MSN business in the mainland, said MSN China's PR department.

"In the past seven years, we saw Google pull its Web-search engine out of the mainland, spats among various Internet companies and a series of global financial crises," Liu Zhenyu, general manager of MSN China, was quoted by Sina Technology as saying on May 28. "We are one of the few survivors," Liu noted.

Liu said it was against the company's ethics to maximize its number of MSN users by bundling it with other applications like Windows Internet Explorer or Microsoft Windows operating systems.

"Many Chinese companies do that, but our value is to let Web users make their own decision," Liu told Shenzhen Evening News on May 30.

Chen Jiarong, deputy general manager of MSN China, believes the company has a promising future.

"MSN's ideal user experience has always been a combination of global and local accessibility and we pursue high standards in product quality," Chen said.

MSN China said it has approximately 60 million active users in the mainland and recorded a 40 percent income increase and over 200 percent growth in profitability in 2011, according to its latest fiscal report.

Meanwhile, Microsoft China confirmed to the Global Times that it currently has three main sources of income: display ads from the MSN portal and Windows Live services, Bing search engine advertising revenue including that from adCenter and MSN M+, and mobile Internet products.

However, Luo Chuan, CEO of AppChina and former general manager of MSN China, admitted that MSN's performance is getting worse in China.

"The Microsoft headquarters has not supported MSN China as much as it claimed it would, leading to its unsatisfactory product quality," Luo was quoted by donews.com as saying on May 18.

Ways out

According to Liu Zhenyu, MSN China is looking to grow its revenue and profits by pushing into e-commerce, increasing integration with the Windows Phone and boosting the presence of its Bing search engine in the mainland.

Microsoft said it has connected the  MSN platform with NASDAQ-listed social networking site Renren, a Facebook-style site with 124 million active users, in a move to share accounts, services and applications that could help it reach more Chinese Internet users.

China still represents a big opportunity for MSN if it partners with domestic search engines and social networking players in emerging IM niche, according to Cheng Hongyu, an Internet analyst with iResearch.

"Search is critical in driving traffic to websites," said Cheng. "Instant messaging among enterprises and mobile users as well as microblog chat are nascent markets with significant potential."