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Microsoft ups ante in IM race

The software giant plans to launch a trial version of its instant messaging software for corporations, upping the ante in the race for supremacy over instant messaging.

Microsoft on Wednesday launched a trial version of its instant messaging software for corporations, upping the ante in the race for supremacy over one of the world's fastest-growing communications technologies.

Read more about instant messaging
Dubbed Greenwich, Microsoft's new server software allows businesses to support secure instant messaging on a network. In addition, it offers a bridge to Microsoft's popular consumer MSN Messenger IM network, giving it a potential jump on rivals who are lining up to court business customers with instant messaging products and services.

"IM is a very hot subject right now among corporate users trying to tame this technology that has found its way into IT environments without, necessarily, IT approval," said Michael Gartenberg, an analyst at Jupiter Research.

Millions of people have signed up for IM services, which allow people to create lists of online "buddies" with whom they can trade short text messages. Unlike e-mail, IM allows people to see when their "buddies" are available to chat, and allows rapid-fire exchanges that are similar to conversations. The services have proven popular both at home and at work, where they have proliferated despite a lack of security features and other corporate safeguards.

Greenwich offers the latest example of the sudden transformation of instant messaging from a grassroots phenomenon into a serious corporate communications tool--an evolution that blindsided the three biggest IM providers in the consumer market: America Online, Yahoo and Microsoft.

All three have been prepping their popular consumer IM products with new features such as security and authentication to compete with rivals that were quicker to court business customers. But some significant hang-ups continue to stall widespread adoption in the workplace, including a lack of interoperability among the three leading IM networks.

With its heavy presence in both the consumer and corporate markets, Microsoft holds some unique advantages that could help it bridge the gap between the two.

Millions of people already use Microsoft's MSN Messenger client to trade text messages on PCs--an installed base that could ultimately help the company sell its server software. Microsoft has successfully used this formula in the past to extend the reach of its products, such as its Web browser and media player.

Still, the Greenwich beta has some kinks that could hamper its advance into the corporate market, at least for now.

Greenwich does not directly support its Web-based IM client, MSN Messenger, running a separate IM client called Windows Messenger instead. To interoperate with MSN Messenger, Greenwich users need to sign a license with MSN. Once the license is signed, third-party provider IMLogic--not Microsoft--provides the software that lets the two services communicate.

Gurdeep Singh Pall, general manager of Microsoft's real-time collaboration unit, said a simpler path to interoperability was on the agenda. But he did not elaborate on the reasons why the two services, both run by Microsoft, cannot talk without a third-party intermediary.

"In the longer term we do see the Greenwich server federate directly with the MSN service," said Singh Pall. "That is on our road map and we're working on that."

Greenwich is expected to officially launch in the "middle of this year," according to a company representative. Although Microsoft was originally planning to integrate Greenwich into Windows .Net Server 2003, Singh Pall said the company may sell it individually, although no decisions have been made yet.

The beta version of the software will include features for real-time communications beyond instant messaging, such as presence and multiparty collaboration. The software will also include multimedia functions such as PC-to-PC voice and video transmission.

Market hype
Microsoft joins a list of technology's biggest names that have signaled their intent to compete for the corporate IM market, including AOL Time Warner's America Online unit, Yahoo, IBM's Lotus division, Sun Microsystems and Oracle.

A host of smaller players such as IMLogic, FaceTime, Bantu and Jabber are approaching this market as partners and burgeoning players in the market.

All of these companies are responding to heightened cries by corporate information systems departments for control over the growing number of IM clients running on their networks. IM has taken off in the enterprise, according to analysts, and has become a popular means for workers to communicate and multitask.

In 2002, 84 percent of enterprises surveyed had IM software running on their network, according to research firm Osterman Research. This year, that percentage is expected to rise to 91 percent, and nearly 100 percent in 2007, the study predicted.

Most of this growth has come from the grassroots level. People at work have downloaded popular free IM services such as AOL Instant Messenger (AIM), ICQ, MSN Messenger and Yahoo Messenger, under the noses of their IT managers.

It wasn't long until IT departments began noticing volumes of data being exchanged through insecure holes in the firewalls. Although companies in tightly regulated industries such as finance have blocked free IM and implemented their own software, other attempts by companies have met resistance from people already hooked on IM.

This trend has turned into an opportunity for the public IM providers and enterprise software vendors. The free providers have announced plans to launch versions bundled with encryption, security, authentication and logging. It also allows them to charge fees for IM, which has remained militantly free for people to download.

Corporate IT demands for greater control over IM and fears about unfettered data exchange have sparked a push among software vendors to incorporate IM into their enterprise suites. Lotus' Sametime IM service leads the pack, according to analysts, but other vendors such as Sun are planning to launch their own standalone products.

Microsoft's two heads
Microsoft stands alone in approaching enterprise IM from both sides of the firewall. The beta release of Greenwich highlights the urgency the Microsoft has placed on enterprise IM, partly from smelling a market opportunity but mostly to play catch-up.

The biggest issue facing Greenwich is interoperability. Microsoft is trying to figure out how to allow Greenwich users to communicate with MSN's millions of IM users without diluting the business application. In contrast to direct software sales to businesses, MSN Messenger is a cost center that is used to amass free users with the hope of upgrading them one day to paid users.

Greenwich supports an interoperability standard called Session Initiation Protocol (SIP), which is also supported by Lotus' Sametime, but not currently supported by AOL, Yahoo or even MSN Messenger. It would be easier for Greenwich to interoperate with IBM's Sametime, and the companies have hinted at their interest in doing so.

Connecting the enterprise with MSN will be key for Greenwich to flourish in the long term. Although Microsoft executives would not elaborate on their plans for the two sides to work more closely together, its use of third-party provider IMLogic may be a short-term patch while it figures out its Greenwich-MSN relationship.

"Eventually a subsequent version of MSN messenger will come out that does use SIP, and they will be interoperable," said Charles Golvin, an analyst at Forrester Research. "They're now using (IMLogic's) interoperability as not only a stopgap but as a quicker time to market to solve compatibility issues."