IM: From fad to big business and beyond

By Jim Hu, Special to ZDNet
14 March 2003 10:20 AM
Tags: chat, im, messenger, instant, talk, aol, yahoo, company

The players


These plans have raised flags among software giants that are already entrenched in the enterprise messaging market. The company that has made the deepest inroads so far is Sametime, developed by IBM's Lotus division. An estimated 275,000 people are using Sametime software in businesses, while two-thirds of global Fortune 100 companies have purchased Sametime products, according to the company.

Those numbers are dwarfed by the hundreds of millions of people using free IM systems, but these customers are far more valuable to software companies for one reason: They pay for their products. And such paying customers are typically reluctant to switch technologies after spending significant sums on systems they have been using for years.

"Companies such as MSN, AOL and Yahoo are community builders, and they're good at it, but don't confuse community builders with software vendors," said Jeremy Dies, Senior Offerings Manager for IBM's Lotus Software. "It's a dramatically different world."

Sun is another established enterprise player seeking to expand its IM presence. The company has long offered instant messaging as part of its Sun ONE (One Network Environment) Portal Server Suite, but last week it confirmed plans to launch a standalone IM server that uses the Linux operating system.

Perhaps the most anticipated entry in the corporate IM market is Microsoft's. With Greenwich, the software giant plans to offer a bridge from the corporate Windows Messenger to the public MSN Messenger network, as well as offer new features such as peer-to-peer voice and video conferencing.

David Gurle, the Microsoft executive who oversees Greenwich's development, considers MSN a separate business from his server product. But the company hopes the two will eventually communicate based on a common protocol called SIP (Session Initiation Protocol), which Microsoft and IBM's Lotus are touting.

That standard allows systems carrying multimedia traffic--video, audio and text--to operate with one another. Microsoft and IBM both consider the protocol to be the foundation for achieving the elusive goal of IM interoperability, which all parties agree will open the door for IM to flourish on both sides of the corporate firewall.

"Unless you go through this path, you will be missing the boat," Gurle said of the protocol during a recent speech at the Instant Messaging Planet conference in Boston. He added that the onus will be on the public IM providers to adopt the standard.

The lockout

However, even if SIP gains support, it is no panacea. At the Instant Messaging Planet conference, executives from AOL and Yahoo underscored their long-held positions that interoperability among the public IM providers is a business issue that goes beyond any technological standard.

"Microsoft and IBM's answer to this question is to just embrace SIP and we're done," said Ken Hickman, director of product strategy for Yahoo's enterprise solutions division. "The big question is when you get interoperability, where is money going to flow and how is it going to flow?"

The companies that provide free IM services have never attempted to charge for the products for fear of mass defections to rival networks. Each has sought to build loyalty among its ranks of millions in the hope of exposing them to other areas and products on the companies' Web networks, as well as to advertising.

For this reason, AOL and Yahoo are in no rush to open their doors to each another. The lack of interoperability has not only helped AOL maintain the largest IM base in the world, but it has also helped MSN and Yahoo grow their own services because people are forced to run multiple IM clients on their PCs when communicating with others.

In November, AOL introduced an enterprise IM product that allows companies to implement logging and archiving capabilities. This spring, AOL will release AIM 5.2, which includes encryption powered by VeriSign. AOL's efforts are intended to maintain its consumer IM base while offering some enterprise features--but with no urgency toward interoperability.

"It's something we'll be mindful of and watching," said Bruce Stewart, senior vice president of AOL Strategic Business Solutions. "It's not a top priority now to resolve and look at those issues."

If AOL, MSN and Yahoo indeed want to break the interoperability deadlock as a business issue, they will be venturing into unknown territory. The Big Three of IM have acknowledged that there needs to be a viable business reason to do so--one that can allay fears that interoperability would shrink their ranks. No one has the right answer, but at least some companies are taking a public stage to think through this dilemma.

"Pick the telco model," Yahoo's Hickman said. "When AT&T hooked up with the regional Bells to give them long-distance services, they had to come up with a business model to figure out how much money would flow between the Bells and AT&T. That's stuff that has to be figured out."

Until then, IM in the workplace will continue to be something that information technology departments will be unable to control fully. Companies may decide to buy corporate enterprise software and control it, much in the way Sprint is now using technology from start-up Bantu, but the momentum to communicate outside the firewall seems too strong to stop.

"I can't imagine having e-mail that only talks to your company," Sprint's Utley said. "That's the biggest stumbling block. It's not a tech problem--it's a business problem."

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