Business IM Vendors Look for Answers, Profits

While everyone uses IM in business, many companies are finding it's tough to make money from it, as AOL and Yahoo distance themselves from corporate communications.

Two purveyors of popular IM (instant messaging) clients are taking their leave from the enterprise market. According to analysts, what is a retreat for some will be an opportunity for established players.

First, Yahoo on Friday pulled the plug on its enterprise version of its free instant-messaging client, Yahoo! Business Messenger. Next, America Online Inc. on Monday closed down sales of its two-year-old enterprise offering, AIM Enterprise Gateway.

While both companies, have clearly put business IM on the back burner, neither are leaving their customers completely in the lurch, executives said.

AOLs Enterprise Gateway users, according to Brian Curry, senior director for AIM network services, will be migrated to IMlogic Inc.s IM management software. The Waltham, Mass.- based companys software enables businesses to monitor AOL IM traffic to enforce corporate usage and security policies.

/zimages/3/28571.gifClick here to read an eWEEK Labs review of IM Manager.

For its part, Yahoo has partnered with enterprise IM management software vendor Akonix Inc. Like AOL customers with IMLogic, YIM (Yahoo IM) business users will be able to use Akonixs software to monitor IM traffic and enforce corporate policies.

/zimages/3/28571.gifRead more here about Akonixs recent technology acquisitions.

At the same time, though, analysts agree that both companies are getting out of the corporate IM business. "Theyve not had great success," commented David Ferris, president of Ferris Research,, a San Francisco, Calif. research firm that specializes in messaging and collaboration.

"Its a tough sale going from giving something away to selling it to enterprises," remarked Dan Keldsen, a senior analyst at Delphi Group, a business and IT research group.

Part of the problem that drove AOL and Yahoo from the business IM market is that, "Its been growing more slowly than many have predicted," observed Robert Mahowald, IDC research manager.

However, the recent moves were due to more than the slow expansion of the business IM market, according to Genelle Hung, communications director for The Radicati Group Inc., a messaging and collaboration research firm. "Yahoos client, in particular was very consumer-ish and not very attractive to businesses. Yahoos efforts were a shot in the dark." According to Hung, the entire market segment was in trouble. "Business IM is still floundering. No one has found a sweet spot to make it profitable."

However, just because Yahoo and AOL are exiting the enterprise instant-messaging business doesnt mean Microsoft Corp. is packing its bags. In fact, Redmond continues to beat the enterprise IM drum louder than ever with the arrival of Microsofts Live Communication Server (LCS).

/zimages/3/28571.gifTo read more about Microsofts LCS 2005, click here.

However, IBM Lotus Instant Messaging (also known by its older name, Sametime), according to Ferris, still has the strongest position in business IM. "IBM has been successful [in business IM] and Microsoft slowly getting its act together."

Mahowald believes that Microsofts LCS may be what the market needs to take business IM to the next level. "Microsoft is the most interesting because with LCS, IM is part of something larger rather than a one-off application."

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