Microsoft to launch corporate IM

Microsoft on Wednesday is expected to unveil a new instant messaging service aimed at corporate customers, jump-starting belated efforts by the software giant to tap a fast-growing, new market for the hugely popular technology.

According to

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sources familiar with the product, MSN Messenger Connect for Enterprises will add security, archiving and other message-management features sought by companies that are beginning to warm to the idea of allowing employees to conduct business over instant messaging (IM) networks.

Wednesday's release could act as a placeholder for the company while it puts the finishing touches on a more ambitious plan to develop corporate IM server technology. That product, code-named Greenwich, is still six months or more away from release.

"Maybe it's just a stopgap measure for the next eight months until Greenwich actually comes out," Directions on Microsoft analyst Matt Rosoff said.

In a move that signals how far Microsoft has to go, the software giant has partnered on MSN Messenger Connect for Enterprises with at least two start-ups that have established a beachhead in the corporate IM market: FaceTime Communications and IMLogic.

Microsoft's entry into corporate IM comes on the heels of similar efforts from Internet competitors America Online and Yahoo. Last week, AOL unveiled Enterprise AIM, a software package that lets companies set up secure internal IM systems. In October, Yahoo announced it would begin selling its own corporate instant messaging product as part of its enterprise portal business.

For the three Internet giants, corporate IM is a means to generate revenue from the technology. Instant messaging has flourished as a free service that online consumers use religiously to exchange real-time text messages. Aside from attaching advertising and promotions onto the software, companies have avoided forcing people to pay. IM providers hope that adding network security and other features to these products will convince companies to pay.

Representatives from Microsoft, IMLogic and FaceTime declined to comment on Wednesday's announcement.

Companies who use MSN will have to choose between FaceTime and IMLogic for IM security and management features. Both products allow corporations to implement tools that mirror those found in e-mail servers, such as assigning identities and passwords, adding network security, and archiving and monitoring of message exchanges, according to a source familiar with the companies' product plans.

FaceTime and IMLogic will install and service their management software for servers run by MSN's corporate clients.

IM in the workplace
IBM has long-offered corporate IM with its Lotus Sametime product, which dominates the official business IM market, according to analysts. But it has been illicit office use of consumer IM services such as AOL's ICQ and AOL Instant Messenger (AIM) that has recently thrust the technology into the spotlight for corporate information technology managers.

Companies, including top Wall Street brokerages, have banned popular consumer IM products in the workplace and have begun testing services from IM providers including FaceTime that offer security and other features, such as message archiving. These features are designed to bring the technology into compliance with regulations governing brokerage customer communications.

Microsoft's attempts to woo corporate IM customers comes as the amount of time people spend chatting via instant messengers at work is ballooning.

Among organizations that use instant messaging in an official capacity, Lotus Sametime captures 69 percent of the market, according to a report from Osterman Research. But the research firm found that result accounts for only a fraction of the at-work IM audience, where unauthorized IM services are rampant.

People in 82 percent of all organizations are using some sort of IM application, Osterman found. Of those IM users, 70 percent use AIM, while Microsoft's MSN Messenger is a distant second with 51 percent and Yahoo Messenger third with 44 percent. But IM use is officially sanctioned in only 34 percent of large organizations, 23 percent of medium-sized organizations, and 19 percent of small organizations; a full 23 percent of organizations surveyed blocked IM traffic at the firewall.

Road to Greenwich
The MSN Messenger Connect for Enterprises move could solve some problems for Microsoft as corporations increasingly look to release IM inside the firewall. Right now, the software maker faces several limitations on delivering the kind of robust, secure instant messaging solution larger companies are looking for.

Microsoft's corporate messaging is largely delivered through Exchange Server. Companies using that software can enable instant messaging across, say, their corporate Intranet rather than relying on public services. But Exchange Server lacks sophisticated real-time collaboration and security features big companies are asking for.

So Microsoft is moving the instant messaging technology out of Exchange Server and adding it to Windows .Net Server 2003, the successor to Windows 2000 Server. But Microsoft doesn't expect to formally ship .Net Server to the majority of customers until first quarter 2003. Even when .Net Server does ship, the corporate instant messaging component, Greenwich, won't be immediately available.

In October, Katie Hunter, Greenwich product manager, said Microsoft wouldn't release the product until "probably two quarters following" the launch of .Net Server.

Microsoft is positioning Greenwich as a real-time communications and collaboration operating system around which third-party developers and big businesses can create more sophisticated messaging, videoconferencing and Internet-based communications applications.

Microsoft has made Greenwich compliant with the Session Initiation Protocol (SIP) advocated by the Internet Engineering Task Force (IETF). SIP is a framework for establishing, maintaining and ending Internet multimedia conferences and phone calls.

Windows Messenger, the IM client shipping with Windows XP, also supports SIP and many of the features planned for Greenwich when operating across Microsoft's public instant messaging service.

In positioning MSN for the enterprise, Microsoft not only adds capabilities missing at the server but also at the client. The majority of businesses run Windows 2000, which does not include Windows Messenger. MSN Messenger running on Windows 2000 right now does not support more sophisticated collaborative, archiving and security features. MSN Messenger Connect for Enterprises could help level the playing field with competing products.

"IBM and Lotus pretty much have a lock on that market. I guess Microsoft is just worried about IBM getting even further ahead," Rosoff said. "Then Yahoo also has released some enterprise products."