Arch Rivals Partner on Enterprise Messaging

In an effort to tailor their various instant messaging (IM) services for better use by enterprise and remove the interoperability issues that have precluded a bigger business embrace of the real-time communication, Microsoft (Nasdaq: MSFT), America Online and Yahoo (Nasdaq: YHOO) today announced connectivity among the competing services using Microsoft's Live Communications Server 2005 (LCS).

The companies announced an "IM connectivity arrangement" that reflected a shared view on the potential of enterprise IM (EIM). The companies issued a statement announcing the agreement, calling the interoperability deal "the next step in making EIM as widespread and beneficial as e-mail."

"In much the same way that e-mail significantly has changed today's business landscape, instant messaging is becoming just as ubiquitous in organizations," Microsoft Corporate Vice President of the Real-Time Collaboration Business Unit Anoop Gupta said. "Businesses are inquiring about ways to extend enterprise IM systems beyond network borders to empower their employees to more securely connect with customers, partners, family and friends," he explained.

Analysts indicated that while the move falls short of complete interoperability, it does pave the way for greater enterprise use of IM and will likely boost the appeal of Microsoft's LCS 2005, which is scheduled for release in the fourth quarter. The companies said customers will then be able to try the connectivity with the AOL, MSN and Yahoo networks, with pricing and licensing options to be announced later this year.

The Enterprise IM Age

Microsoft, AOL and Yahoo said LCS will be used to federate and extend IM presence and communication and called the collaboration a response to business requests for secure, archived, real-time communication.

"This agreement represents the dawn of the next era for instant messaging, which will unleash the true potential of real-time communication and collaboration in the workplace, and among our tens of millions of users at work and at home," AOL senior vice president and general manager of desktop messaging Edmund Fish said.

"Because seamlessly connecting corporate users together is core to a collaborative experience, America Online is working to provide access to routing and network services within the Live Communications Server 2005 product."

Yahoo Vice President of communication products Brad Garlinghouse said the move would open Yahoo's Messenger network to the enterprise IM community in a more secure, convenient and seamless manner. "By working strategically with leaders in the enterprise IM environment, we are extending our presence and providing our business users with a productive, private and more secure experience."

Step and Spur

Radicati Group market analyst Genelle Hung told TechNewsWorld the interoperability deal was a good initial move and would remove much of the barrier that businesses have encountered when adopting and using IM.

"I think it's actually a very positive step forward," Hung said. "It's as close to interoperability for enterprise IM as you're going to get now. They're really trying to keep enterprise IM enterprise, making sure it's not where everybody's charging off on the public networks."

Hung, who said the deal makes Microsoft's LCS 50 times more appealing to enterprise, explained the agreement also allows AOL and Yahoo to have an enterprise IM share even though both companies had stepped away from the market previously. The analyst added the deal will likely spur others to compete in EIM.

A Good Model

IDC analyst Robert Mahowald said that although it is not full interoperability among the different IM services, the agreement might pave the way for other integrated models and will appeal to enterprises looking to benefit from IM.

"I think it's big news," Mahowald told TechNewsWorld. "It's not quite the open SMTP system that many people would like to have, but it's something very close to it. It's probably a good [model], because no one has been able to figure out a better scheme."

Mahowald said that while AOL and Yahoo have stepped away from the enterprise market, Microsoft might be better suited to make a case for EIM. The analyst also added that the integration of the different IM services will likely bring a need for management and security solutions.

Coup for Microsoft

Gartner (NYSE: IT) analyst Lou Latham called the EIM deal "a major breakthrough," telling TechNewsWorld that while the three IM providers did not actually achieve interoperability, they have enabled functionality among the different systems.

"It's not open SMTP, but it's certainly a lot sooner than I thought this accessibility would be made available," Latham said.

Referring to the evolution of how enterprise has viewed IM, Latham said corporations have gone from wanting to get rid of it, to realizing its value, to wanting to extend it beyond internal use to supply chain and customers. "It's becoming a real demand," Latham said.

The analyst called the deal a coup for Microsoft, particularly in light of AOL's rescinding of interoperability with IBM's (NYSE: IBM) Sametime product.

"It's a big step," Latham said. "It's quite a remarkable bit of diplomacy for Microsoft."