SAN FRANCISCO (CNN/Money) -
Instant Messaging, that ever-popular chat technology loved in the cubicles and cursed in the server rooms, is finally growing up.
AOL (parent company of CNN/Money) released its Enterprise AIM Services this week, unveiling a version of its IM product aimed at the corporate market. It's just an early salvo in what will likely be a pitched and lucrative battle for AOL and its competitors in the IM space: Yahoo! (YHOO: up $0.08 to $15.68, Research, Estimates) and Microsoft (MSFT: down $0.55 to $55.46, Research, Estimates). As with most major battles, the repercussions of this fight will be felt far afield.
First the specifics: AOL's Enterprise AIM offers much more user control than its consumer version, something long sought by most corporations. IT managers are wary of any piece of software they can't control or monitor that acts as a gateway to the Internet. Corporate higher-ups also don't like the idea of sensitive information flowing unchecked in employee chat sessions.
This product addresses both issues: IT managers can set it to work only within a corporate network, and IM sessions (like e-mail) can be audited and stored. Both Yahoo! and Microsoft have announced similar offerings as well. Yahoo!'s will be available in beta form in the fourth quarter of this year, and Microsoft's is expected early next year.
Why all the activity around corporate instant messaging? For one, it's a very popular application. Research firm IDC predicts that the corporate IM market will grow 140 percent from 5.5 million users worldwide in 2000 to 180 million in 2004. By that time, the number of messages sent will approach 2 trillion annually.
Second, and more important for AOL and Yahoo!, corporate IM represents an easy way to add and diversify revenue streams. AOL didn't announce pricing for its Enterprise product, but analyst estimates put it at $34 to $40 per user. (Corporate IM licensing will use a per-seat model.) That's a pretty nice revenue boost for adding a couple of software hooks to an existing product.
One of the first ramifications of IM moving into the enterprise is that finally we will begin to see interoperability among the three major instant-messaging platforms, something that has eluded the sector. The reason? If corporations ask for interoperability, it's likely a business case can be made for adding the feature.
When IM was a free service, the justification for adding interoperability was that "it's good for mankind," says Glenn Vondrick, CEO of FaceTime Communications, the company making some of the software for both Yahoo!'s and AOL's corporate IM products. "But now they have a business model for it. Now they can negotiate tariffs or fees."
A second, further-out development involves AOL, Yahoo!, and Microsoft using their IM products as Trojan horses to become virtual business communication centers. Why stop with chat when you could have users swapping documents and working on projects in real time? In that sense, the IM products become less about messaging and more about virtual collaboration.
That possibility should scare the daylights out of yet another company: WebEx (WEBX: down $0.85 to $16.74, Research, Estimates), based in San Jose. The virtual meeting company has been a rare standout among Internet firms. It offers virtual meeting rooms in which participants can collaborate on projects, text chat, voice and videoconference, and more. It's also currently profitable and trading in the respectable $17 range.
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When travel plummeted after 9/11, the company's product suddenly was seen as a viable alternative to spending thousands to fly salespeople across the country for presentations. The company has struck a deal with Microsoft's latest Messenger product, allowing users to start a WebEx meeting from the product's menu options.
"It's quite likely that IM will grow up and into the existing corporate communications infrastructure, which includes calendar and e-mail and will eventually include WebEx services," says Peter Kastner, chief research officer for Aberdeen Research.
The major companies' push into corporate messaging offers "some validation for WebEx," notes Michael Gartenberg, a research director at Jupiter Research. "But it should be a cause for concern. If AOL, Yahoo, and Microsoft sense there's a market, they'll do everything they can to subsume them."
Fortunately for WebEx, such a scenario is still a ways off.
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