America Online Inc., Microsoft Corp. and Yahoo Inc. are teaming up to link their separate instant messaging services for use in the workplace, the first major step by the industry leaders to enable computer users to communicate with one another no matter which of the three systems they use.
In an announcement planned for today, the triumvirate will outline a new partnership aimed at spurring greater use of instant messaging at work by tearing down the electronic walls that keep the respective networks separate. To use the new system, companies will have to license new Microsoft network software that will serve as the hub connecting messaging systems operated separately by AOL, Microsoft's MSN division and Yahoo.
"This is a very significant announcement," said Nate Root, a senior analyst with Forrester Research. "The value here is for corporations. Corporations will now have the ability to span the instant messaging landscape."
Instant messaging through computers, phones and other handheld devices is similar to the telephone, in that people communicate with each other directly and immediately. Most instant messages involve short text notes traded back and forth on computer screens, although some systems allow users to talk and see one another through the use of cameras, microphones and speakers or headphones.
The growth of instant messaging has been exponential. AOL officials reported yesterday that the use of instant messaging has doubled over the past year. More than 2 billion instant messages are sent and received on the America Online network daily, surpassing the 400 million e-mails sent daily by AOL users, they said.
For now, the three companies have no plans to permit users outside the workplace to communicate with one another over different instant message systems. America Online maintains a commanding lead among consumers with its AIM and ICQ messaging systems, giving the Dulles company little incentive to open up its network to Microsoft and Yahoo and risk losing market share.
"What this does not do," Root said, "is the holy grail of instant messaging, which is to allow anybody on any network to send a message to anybody on any other network."
Microsoft and Yahoo officials expressed optimism yesterday, saying this first step was likely to lead to new partnerships.
"This lays the groundwork for instant messaging to become as widespread and useful as e-mail is today," said Taylor Collyer, senior director of real-time collaboration marketing at Microsoft. "If you can connect to everybody, it becomes more valuable. I believe this announcement will lead to that happening with instant messaging."
"We have been active advocates and proponents of seeing interoperability enabled beyond the enterprise," said Brad Garlinghouse, Yahoo's vice president for communications products. "This jump-starts that and is indicative of the kind of success we can have working together."
AOL has been struggling to break into the corporate market for instant messaging, and the fresh pact with Microsoft, which will market and sell the new service, is likely to facilitate that process. While AOL is a consumer-based firm, Microsoft has a tremendous presence in the corporate market. Microsoft already has tens of millions of users who communicate over an earlier version of its network software, called Life Communications Server.
As part of the business partnership among the three, Microsoft will receive a license fee from companies for its network software and support, then pay unspecified fees to AOL and Yahoo, officials said.
While analysts said the new partnership is a setback for IBM -- which has its Sametime messaging system in the leading position in the workplace -- they predicted that IBM would seek to cut deals with AOL, Yahoo and Microsoft's MSN division in the coming months. IBM, they said, has time to play catch-up since the Microsoft-led effort with AOL and Yahoo will not be operational before early 2005, analysts said.
"IBM is free to go out and negotiate the exact same deals with Yahoo and AOL, but the MSN Messenger is a wild card," Root said. "Microsoft could delay or deny that link to MSN. Microsoft might have an inherent competitive advantage that IBM can't do anything about."
Thus far, most instant messaging in the workplace has occurred informally and from the bottom up, with individuals, rather than corporate computer systems mavens, driving the activity and traffic. While millions of individuals use AOL's AIM instant messaging service at work, AOL collects no fees for the free service, and corporations often do not control its use.
The new service being touted by Microsoft, AOL and Yahoo would have features, including the electronic recording and saving of instant messages, and the guarantee of secure communications, that the free instant messaging services do not include. The ability to store and retrieve instant messages is critical for businesses placing orders with suppliers, brokerage firms confirming stock purchases to investors and in numerous other commercial transactions and communications.
While consumers have been enthusiastic users of instant messaging, it remains to be seen whether corporations will be willing to spend more on the service. In a recent Forrester survey, about 45 percent of businesses had no plans for formalizing instant messaging in 2004.