Will Social Features Make Email Sexy Again?
Email providers are trying to steal some of social networking's thunder as fast-growing services like Facebook Inc. begin to encroach on their turf. — The biggest Web email services — including Yahoo Inc., Microsoft Corp. and Time Warner Inc.'s AOL unit …
Context & Ripple Effects
This lands two days after VentureBeat profiled four startups out to reinvent email, so the incumbents' move reads as a defensive answer to a threat arriving from both directions: Facebook pulling user attention toward the social graph, and founders circling the inbox itself. Per the WSJ report, Yahoo, Microsoft and AOL are all wiring social networking features into their webmail services in response.
For AOL specifically, the timing is awkward. CEO Randy Falco had just sent staff a letter confirming layoffs of 2,000 of its roughly 10,000 employees (decoded by BoomTown on October 16), days after relaunching Netscape's social news site as Propeller — meaning the company is cutting deep into its legacy business at the very moment it commits to social features as the growth story.
First-order effects
- Yahoo, Microsoft and AOL shift product resources toward making webmail social — contact lists and message streams become the competitive surface against Facebook rather than storage or spam filtering.
- AOL pursues that pivot while absorbing a 2,000-person layoff announced October 15, forcing the social-email bet to carry weight with a materially smaller team.
Second-order effects
- Facebook's encroachment pressures the free-webmail advertising model: if social time displaces inbox time on portal properties, the page inventory those ads monetize shrinks, squeezing the exact revenue line funding the new features.
- Startup activity around reinventing email gets validated — and put in acquisition territory — once the largest mailbox owners signal they want the same capabilities built in-house.
Third-order effects
- If the pattern holds, ownership of the address book becomes the strategic asset: whichever platform controls a user's contacts can bolt social features onto an installed base no standalone network has to cold-start.
- The boundary between 'email provider' and 'social network' erodes toward converged communication hubs, with regulation of how those merged graphs are used likely to follow only after the consolidation is underway.
The trend: Webmail is being rebuilt as a social platform, as Yahoo, Microsoft and AOL treat the inbox and its contact graph as their last defensible position against Facebook's pull on user time.