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AIM to follow ICQ in targeting Web site chat

America Online is catching the latest wave in Internet chat, and the result could spell disaster for some innovative start-ups and Web site chat communities in general.

America Online is catching the latest wave in Internet chat, and the result could spell disaster for some innovative start-ups and Web site chat communities in general.

This summer, two firms launched with products that let users see who else with the software is visiting a particular Web site and then chat with them. Both Gooey, from Tel Aviv-based Hypernix, and Odigo, from New York-based NovaWiz, promised to make Web surfing a less solitary experience and create groups of people with a shared interest: the Web sites they visit.

The idea caught on with users; since its June launch, Gooey has amassed 250,000 registrations, Odigo 150,000.

But a significant cloud appeared on the horizon last month when ICQ, a wildly popular chat and messaging client acquired by AOL last year, launched a trial version of a similar technology. Dubbed ICQ Surf, the "alpha" software has attracted 48,000 trial users since launching September 22. A "beta," or more polished trial version, is due "soon," according to ICQ.

ICQ has 44 million registrations, according to AOL. One person can register multiple names, however, so the number of people using ICQ is probably only a fraction of the 44 million total.

In worse news for Gooey and Odigo, AOL is also at work on Web site-specific chat technology for its AOL Instant Messenger (AIM) software.

When it announced quarterly earnings yesterday, AOL said it had 31 million users for AIM.

Hypernix and NovaWiz put a positive spin on the news that AOL is getting into their act, saying that AOL's interest proves the value of their idea and should propel the market where they have solid technology leads.

"It's excellent," said NovaWiz president Shai Buber of AOL's moves. "It's a clear validation of the concept and means it's likely to become the standard. The concept is to be communicating based on content, not based on people that you know offline or online."

Hypernix was similarly optimistic.

"We see this as a positive development, because AOL has seen that our technology is so advanced and so revolutionary that in order for them to reinforce their prominence in instant messaging technology, they have to mimic us," said Guy Blachman, director of U.S. business development for Hypernix. "We are putting out a technology that revolutionizes the whole communications arena."

AOL's advantages
AOL brings solid advantages to the table in competing with the start-ups, including enormous marketing strength and the vast reach of its existing products. But the start-ups said their technology lead will help them prevail against one of the most formidable adversaries in the industry.

"We respect ICQ's size and prominence," Blachman said. "But when people check out Gooey, they will see our technology is so much more advanced that you will see a lot of people moving to us."

With its foray into what it calls "cobrowsing," AOL undoubtedly is less concerned with competing with the pioneering start-ups than with staying ahead of archrival Microsoft and its MSN Messenger software. Microsoft was unavailable to comment on Web site-specific chat software or its plans, if any, to enter that market.

The revolutionary nature of this technology, especially with the entry of AOL and its tens of millions of registrations, may shake up more than just instant messaging software providers. Because these applications essentially keep a chat room from site to site, they have the potential to sap populations of chatters from the sites themselves.

For example, if a user with the Odigo client running visits an investor site, he or she may be distracted or dissuaded from entering that site's chat area. And that could pull an important source of revenue--in advertising and sometimes in membership or other fees--from the Web site.

Borrowing a page from ICQ, the new chat clients offer more than chat in an attempt to position themselves as communications "portals." Gooey, for instance, offers its own window for streaming media and animated content, in addition to a list, called "Hitwave," of the sites most popular with other Gooey users. ICQ Surf has a similar list, called "Hot Places."

Calling for backup
As technology gets hammered out and users sign up, both start-ups are busy forming partnerships to solidify their advantage as early birds. "Our idea is to license Odigo," NovaWiz's Buber said. "We have done some deals, not that significant, but we're in the process of negotiating deals with major players."

Hypernix received a $2.64 million investment from CNET, publisher of News.com; CNET's investment amounts to a 4.2 percent stake in the company. Hypernix also has relationships with CNET-affiliated Xoom.com and Snap.com, as well as with TheGlobe.com.

Gooey will be a feature of Elephant X, an upcoming financial information site. Other deals are in the works, according to Hypernix's Blachman, including "very big names" interested in offering cobranded versions of the software.

Hypernix plans an initial public offering in the second quarter of next year.