IM buddy making more powerful friends

Software start-up ActiveBuddy said it has secured agreements to deliver real-time stock quotes via automated instant messenger "bots" with the Nasdaq Stock Market, the New York Stock Exchange and the American Stock Exchange.

The New York-based company is testing a service to send news, weather and related information via instant text messages.

Monday's endorsement comes as ActiveBuddy prepares to launch a financial "buddy" branded by Reuters, one of its two financial backers. The buddy, which will sit on a chat program's friend list, will let people send an instant message with the text "GE stock," for example, and instantly receive a response with the current price of General Electric shares.

ActiveBuddy is planning a broad launch of its service in June.

"Whenever you get a population in the hundreds of millions, developers are going to rush to build applications for those services," said Dan O'Brien, senior analyst at Forrester Research. "It's about turning IM into a more general-purpose tool, not for the display of rich information the way the browser does but for quick access to data."

ActiveBuddy is only the latest example of how instant messaging is getting a face-lift. Microsoft and others are exploring new ways to turn instant messengers from chat boxes into something that rivals the power of the Web itself.

Taking advantage of the sheer popularity of instant messaging, Net businesses are quickly trying to transform instant chat into a vehicle for file sharing; transactions; private, encrypted communication networks; and access to real-time data. By adding such features, any of the IM networks could gain a competitive advantage in the marketplace.

Microsoft plans to overhaul instant messaging with its upcoming set of Web services building blocks, code-named HailStorm. With this project, the company is set to position an instant messenger as a complete development application, going far beyond being a vehicle for simple conversations. Its IM technology would be the infrastructure for a range of Web services, including Web-based e-mail, real-time stock quotes and calendar functions.

Microsoft Chief Executive Steve Ballmer first discussed the idea of using instant messaging as a Web service-delivery mechanism for online transaction data more than a year ago.

IBM, Microsoft and several other small players have already created a well-established market for IM in business. IBM Lotus, for example, introduced Sametime, which lets corporations interact via instant messenger on an encrypted network. Microsoft has a similar product within Exchange.

For consumers, Yahoo and others have pushed to make instant messaging more Web-like with each iteration. The newest version of Yahoo Messenger, introduced earlier this month, includes PC-to-phone calls for the international market, as well as the ability to archive conversations, similar to e-mail message archives.

The IM service had already offered stock quotes, news, auction alerts and calendar lists for consumers who have personalized such services on its site. And a Yahoo representative said the company is "evaluating different uses of Yahoo Messenger."

Consumers, meanwhile, have started swapping files through instant messaging via services such as Aimster.

Although such features may add to the popularity of instant messaging, they may not add to the bottom line. Yahoo, America Online and others have long tried to figure out how to make money from instant chat. One answer has been to sell ads within the instant text box. Marketers have also started to contact consumers on IM through file-sharing networks such as Napster.

ActiveBuddy plans to make money by licensing its technology to major brands wanting to reach consumers. It recently inked a deal with Capitol Records to build the first "activebuddy" to market the launch of a new record from rock band Radiohead, due out June 5. The buddy will let fans pull up fast answers on the band's tour dates, song lists and bios, among other tidbits.

It is also negotiating with the major IM providers to offer its service on their networks for a fee, analysts say.

ActiveBuddy has developed a natural-language search called "buddy script." This script can communicate with various content databases, such as Reuters, to pull up answers on topics at lightning speed.

An early version of the technology quietly lived inside AOL Time Warner, Microsoft and Yahoo chat networks under the code name Smarterchild. The buddy provides movie schedules, stock quotes and news headlines, as well as a search function for dictionary terms and answers to math questions.

The company is quietly testing its buddy for Radiohead under the code name Googlyminotaur.

Despite the potential for such a service, it faces several hurdles, including a lack of standards among IM networks. AOL Time Warner's AOL Instant Messenger and ICQ services do not work with each other or with rival services such as Microsoft's MSN Messenger and Yahoo Messenger, forcing a battle over interoperability that could slow the development of new features such as ActiveBuddy's data bots.

In addition, the networks aren't equipped for secure communication. As a result, deals to allow stock trades or retail purchases via IM haven't come to fruition, said Nicole Lewis, associate analyst at Jupiter Media Metrix.

"The potential for IM is within marketing-oriented services," she said.