The IM world in recent months has been further splintered by the emergence of a growing corporate market. Companies have been reluctant to embrace IM in the office and in some cases have enacted policies banning the use of products such as ICQ, AIM, MSN Messenger and Yahoo! Messenger due to security concerns. A number of secure IM services, including Communicator and IBM's Lotus Sametime, have stepped into the gap, seeking to charge companies for proprietary technology that provides verification, chat-monitoring and archiving functions. AOL has also been trying to position itself in this area. Last year it signed a deal with Sametime to conduct the first interoperability trials for its AIM service. It has also sought to beef up security for its AIM product, inking a deal Friday with VeriSign to provide encrypted chat as part of a service to be marketed as "Enterprise AIM." Such services could serve as a push for interoperability as businesses such as brokerages seek to offer IM services to customers -- for example, the ability to place instant "buy" and "sell" orders for stocks. Last month, Communicator said it signed multiyear, multimillion-dollar contracts to license its Communicator Hub IM service to Salomon Smith Barney, J.P. Morgan Chase, Merrill Lynch, Credit Suisse First Boston, Goldman Sachs, Lehman Brothers, Morgan Stanley and UBS Warburg. One force that could push interoperability could arise in the wireless arena. Mobile phone companies are already trying to find ways to put a text messaging service dubbed SMS (Short Message Service) in consumers' hands. Although SMS is not technically Internet-based messaging, it opens an attractive avenue for companies like AOL, Microsoft and Yahoo! to offer messaging services to mobile phone companies. Phone companies typically charge people for sending messages and share revenue with Web companies. "It's not about whether AOL, Yahoo! and MSN prove to the public they can work with one another, but when and how their IM services are tied into SMS messaging," said Jeff Pulver, who organises conferences in presence and instant messaging technology. Such products promise an enormous incentive to IM providers in the form of billable services. Consumer IM for now is basically free, with companies such as Yahoo! and AOL experimenting with advertising as the their primary source of revenue. Still, while some steps have been made, interoperability remains on the sidelines. To date, the closest the industry has come to a server-to-server interoperability standard is the adoption of SIP, short for Session Initiation Protocol. Co-authored by Microsoft, Cisco Systems and Dynamicsoft, SIP is a protocol commonly found in IP phones that allows two end-points on the Internet to exchange information about content. This information is not limited to text messages but can also include multimedia sessions, such as voice or video. Despite the slow advances toward interoperability, Microsoft said standards are at the core of its IM strategy. "There's no conceivable way that these systems will exist without product innovation that will translate into revenue," said Bob Visse, director of marketing for MSN. "The only way to get there is to have an interoperable solution that works for all these companies." Already, AOL and Microsoft have begun testing and implementing various uses of SIP in their products. AOL in August 2001 began testing ways to communicate with Sametime -- software made by IBM's Lotus division -- using a SIP-based IM application called SIMPLE. Microsoft has already incorporated SIP as the protocol used in Windows Messenger, an instant messaging and conferencing application in its latest operating system, Windows XP. Jon Peterson, co-chairman of the SIMPLE working group of the Internet Engineering Task Force, the standards body overseeing IM interoperability, said he was "very pleased" with the way AOL and Microsoft have gravitated toward using SIMPLE. But he noted that the companies are still divergent about how the protocol will be used on their systems. "Clearly, people who run these services want some degree of ownership of the customer," Peterson said. "Anything that will relinquish the service provider's ability to acquire customers is obviously going to be problematic." Indeed, ownership of the customer is the single reason why AOL, Microsoft and Yahoo! have kept their public stance on interoperability relatively quiet in the past year. For AOL's competitors, especially Microsoft and Yahoo!, recent customer gains have given their services considerable traction. While Microsoft argued aggressively in favour of forcing AOL to open its instant messaging network as a condition to the online giant's merger with Time Warner, it had already begun developing its plan to turn instant messaging into a central application for Windows XP. Versions of XP now come bundled with Windows Messenger, which can communicate with its Web-based counterpart, MSN Messenger, and has been touted by Microsoft executives as a catalyst for XP sales. Now every time people buy a new PC, they will get Windows Messenger as the default IM service, along with other Web- and operating system-based applications such as Windows Media Player and Internet Explorer. At the same time, instant messaging has become increasingly important to Microsoft's overall .Net initiative, which aims to make all of the company's software and services available through the Web to any type of computing device, handheld organiser or cellular phone with the company's Passport security technology. The initiative is one way Microsoft hopes to maintain the dominance of Windows as the world moves beyond the traditional desktop PC for its technological needs. Moreover, Microsoft intends to charge for this service, making it a major test to determine whether people will be willing to pay to use the Web. All online companies are watching the experiment closely for clues to their own future now that advertising revenue alone has proven insufficient to sustain many businesses. "Microsoft has its fingers all over this," said Robert Mahowald, a senior research analyst at IDC. "It's got the consumer portal, it's got Exchange IM and Windows XP messaging, which at this point we don't know if their new users come from businesses or consumers. They've got all the bases covered." Yahoo! has also been taking more steps to make money with its IM service, primarily through advertising. The company has been touting its IMVironments feature, which allows a marketer, such as a film studio, to create graphical promotions that people can load into their messaging windows. For the Web portal, instant messaging is a way for Yahoo! to keep its fickle visitors on its services. Messenger is tied into many other applications and allows the company to sell advertising on it as well. Geoff Ralston, Yahoo!'s senior vice president of communications, acknowledged that the industry's progress toward interoperability has not followed its expected timeline. Ralston said Yahoo! is working with standards bodies to support an interoperability system, but he was hesitant to name any specific measures the company supports. Ralston emphasised that progress for interoperability resides with the leaders of the pack. "It's important that interoperability conversations need to take place among the big three, because those are the community of users that far outweigh any other community," he said. "Any other interoperability is secondary." IDC's Mahowald, however, dismissed the notion. Getting the three biggest Internet giants, all of them fierce competitors, to shake hands and hammer out an agreement seems unlikely to happen anytime soon. "That is in my mind a pie in the sky, because Microsoft and AOL famously do not get along, and each has significant enough plans with what to do with its user base," Mahowald said.
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