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    Business IM Vendors Look for Answers, Profits

    Written by

    Steven J. Vaughan-Nichols
    Published June 21, 2004
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      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.”

      Next Page: Whats Really Wrong with the Enterprise IM Market

      Whats Really Wrong with


      the Enterprise IM Market”>

      According to Ben Littauer, a consultant working with Ferris Research, theres a fundamental vision problem lurking behind the obvious problem of IMs slow growth in the business market. “While many individuals within corporations use IM regularly for both business and personal reasons, corporate understanding of the IM phenomenon is still lacking,” Littauer said. “Corporate managers have not yet come to grips with either the risks or benefits that come with IM.”

      IDCs Mahowald agreed with this assessment. “CIOs and CFOs have a hard time proving its value even though anyone who uses it knows how useful it can be. Part of the problem with its market acceptance may be that with todays smaller IT staff, companies are turning a blind eye to informal corporate IM use rather than deal with managing it.”

      According to Radicati, businesses certainly are using IM, even if theyre not managing it. In their latest survey, Radicati found that 45 percent of corporations deploy enterprise IM for faster intra-office communications.

      Instant messaging without corporate oversight, Littauer observed, is an approach fraught with problems. In a recent white paper on the market, he offered that IM conversations are not monitored or recorded, which may put an organization in noncompliance with such legal requirements as SEC regulations, HIPAA, or Sarbanes-Oxley and, since public IM client-based, file transfers are desktop-to-desktop they can elude perimeter server-based anti-virus checking.

      /zimages/3/28571.gifTo read more about IM and peer-to-peer security concerns, click here.

      It is in this niche of providing management services to public IM services that vendors such as Akonix, FaceTime Communications Inc. and IMlogic thrive. In addition to providing management services, these companies also offer IM anti-spam, anti-viral and firewall services.

      So while AOL and Yahoo may be moving away from business IM, the bottom line is that there is a potentially large business IM market, analysts said. And its a market thats proved difficult for any company so far—particularly consumer-oriented companies—to make profitable.

      /zimages/3/28571.gifCheck out eWEEK.coms Messaging & Collaboration Center at http://messaging.eweek.com for more on IM and other collaboration technologies.

      /zimages/3/77042.gif

      Be sure to add our eWEEK.com messaging and collaboration news feed to your RSS newsreader or My Yahoo page

      Steven J. Vaughan-Nichols
      Steven J. Vaughan-Nichols
      I'm editor-at-large for Ziff Davis Enterprise. That's a fancy title that means I write about whatever topic strikes my fancy or needs written about across the Ziff Davis Enterprise family of publications. You'll find most of my stories in Linux-Watch, DesktopLinux and eWEEK. Prior to becoming a technology journalist, I worked at NASA and the Department of Defense on numerous major technological projects.

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