The meeting, which took place at Merrill Lynch's New York offices, was among the first convened by the Instant Messaging Standards Board (IMSB), a newly created consortium led by financial services firms Lehman Brothers, J.P. Morgan Chase, Merrill Lynch, Morgan Stanley Dean Witter, UBS and Deutsche Bank.
Formed two months ago to act as ambassador to the IM technology industry, the IMSB plans to make a public announcement about its organization and goals in coming weeks. While the board does not intend to create its own standards, it hopes to nudge IM providers to adopt standards published in the marketplace.
"The goal is to pressurize vendors to adopt interoperability standards," said Navin Rajapakse, assistant vice president at Lehman Brothers and one of the members of the 10-plus member board. "We want IM to be like e-mail."
The financial institutions are trying to wield their influence over an industry that's long been obstinate when it comes to open standards. The chief public IM networks--America Online's Instant Messenger, ICQ, Yahoo Messenger and Microsoft's MSN Messenger--have millions of users, and their operators have been loath to open the networks to competitors. This means that a subscriber of Yahoo's IM service can't chat directly with someone on an AOL Buddy List although some gateways operated by third parties such as Trillian offer workarounds to bridge the gap.
A flicker of hope for interoperability came when AOL, at the time of its Time Warner merger, was ordered by the Federal Communications Commission toPopular--and possibly profitable? its instant messaging system to rivals. But in July, the Internet giant acknowledged that it had in favor of an approach to let rivals access its own proprietary system.
Wall Street may prove a powerful pulpit to press for standards, offering IM providers a potentially lucrative market for the wildly popular technology.
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For the month of July, 12.7 million office workers were using instant messaging services, including those from AOL, Yahoo, MSN, ICQ and Trillian, according to Nielsen/NetRatings.
Much of this office IM use is unofficial, however, and has sparked some companies to ban the technology altogether. Others are seeking alternatives to the popular free services that guarantee security and archiving of messages, among other things. In April, for example, upstart IM provider Communicatora deal to provide secure IM services for eight Wall Street firms.
"Time is money for these people, and having islands of people that can't connect is a potential negative," said Mehdi Maghsoodnia, chief operations officer of FaceTime Communications. "That would be like having a phone that you can only use to call Lehman but you can't use to call Goldman."
Beyond standards lies the vexing question of making interoperable IM pay for all the players involved.
"The problem is not technical; the problem is how do (the IM vendors) get paid for letting (another) client interconnect to (their) network," Maghsoodnia said. IM will grow up in the enterprise "based on economic models that justify the cost of interoperability."
In partnership with AOL and Microsoft, FaceTime recently built a call center IM application for Bank of America. The bank will pay FaceTime, and in turn AOL and Microsoft, to communicate with customers over their networks. The economic model he sees for the future is one that enables the networks to get paid for usage, by the number of people online or by messages transferred.
"There has to be a business model where Microsoft and Yahoo and AOL get paid," Maghsoodnia said.
A failure to communicate
Companies invited to the first meeting of the IMSB included IBM, Jabber, AOL, Communicator, FaceTime Communications, Microsoft, Reuters and MindAlign.
Rajapakse said that the initial meeting helped understand the strategies of the various companies concerning interoperable standards. For example, he said, IBM and Microsoft are venturing in the direction of adopting SIMPLE (SIP for Instant Messaging and Presence Leveraging Extensions), a standard by the Internet Engineering Task Force (IETF) for instant messaging that AOL abandoned. SIMPLE is an application of the group's Session Initiation Protocol (SIP), a technology with numerous applications apart from instant messaging.
Jabber, meanwhile, is promoting its own interoperable standard, the Extensible Messaging and Presence Protocol (XMPP), an XML-based protocol. The IETF isa working group for the protocol.
An AOL representative would not comment on the meeting, only to say "the businesses we've been working with tell us that they are looking for an instant messaging implementation that would allow them to better manage message traffic within their individual networks."
AOL has announced plans to introduce a for-fee service for corporations, but has yet to set a launch date. However, the company has talked about introducing such a service since early 2001.
Microsoft plans to introduce real-time communications software, code-named Greenwich, for use on corporate networks, in partnership with Reuters. The company would not comment on the financial services meeting or its plans for interoperability within such technology. Microsoft's rivals Sun Microsystems and IBM already offer instant messaging software for use on corporate networks.
Jabber CEO Rob Balgley said that the meeting revealed just how important instant messaging is becoming to businesses.
"I think the message I got was: Either you guys do something about it, as we are your customers, or we're going to take matters into our hands. They will start picking vendors who have better strategic thinking about interoperability," he said. "Interoperability is more a business decision than a technology decision."
News.com's Jim Hu contributed to this report.