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Instant Message Deal Leaves Consumers Out in the Cold

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The big three of instant messaging, AOL, Microsoft, and Yahoo announced a deal today that will allow their instant messaging systems to interact by early 2005. The systems will use the Microsoft Live Communications Server 2005 (LCS 2005). However, in order to use the service a software licensing fee will be charged. While this is good news for businesses trying to leverage the benefits of instant messaging in the enterprise; it will leave consumers out in the cold.
Once again the Big 3 are trying to find a way to turn instant messaging into a profitable business. It remains to be seen whether businesses will migrate to the new LCS 2005 server or continue to use the public system which is free. It also calls into question the viability and roles of Face Time and IM Logic which have spent millions developing systems that allow instant messaging systems to inter-operate.

With more than 400 million instant message users worldwide there is no doubt this is an enormous market. It will be interesting to see how the service is priced. The Big 3 have already exited their efforts in the enterprise server market once. Once again, AOL says it will explore ways to allow AIM to inter-operate with MS Messenger, but don’t hold your breath. This has been going on since 2000. And, with this announcement it seems less likely.

With usage prices plummeting on all competing devices it will be interested to see if businesses are willing to pay single user licensing fees north of ten dollars, or usage fees like those charged on telephone lines. Smaller corporations are already using the free “public” versions of these systems with great success. It’s unlikely they will pay licensing fees for a service they already get for free. In industries like financial services AIM already dominates and the new inter-operable system is not really a necessity. While most financial services companies are worried about uncontrolled use of IM, SPIM and viruses, they are not concerned about interoperability. So, where is the “beef”.

Would you pay five dollars a year, or twenty-five dollars one time to get a service that would allow you to “talk” across all instant message systems?

About the Author

Robert T DeMarco is CEO of IP Group in Herndon VA. IP Group offers software communication tools for use on the Internet. These include: PowerTools, Watch Right, Always on Time and IM Frame. Mr. DeMarco is the author/editor of several Weblogs and is also a member of the High Tech Crimes Industry Association (HTCIA). Mr. DeMarco has university level and corporate training and teaching experience, spent 20 years on Wall Street, acted as CEO of a small software company, and is currently discovering the world of blogging.

Robert T DeMarco
IP Group Inc.
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  • Right now, I would like it if all email accounts would accept mail from my yahoo address. We’re going backwards on the email end, which deflates any enthusiasm I have for IM interactivity.

  • I have AIM, iChat, Yahoo, and ICQ accounts. If MS didn’t require Passport for new MSN Messenger accounts, I’d have that, too. I use an aggregating client (and there are good ones for Macs and for Windows), so I don’t really notice what service my friends are on unless I’m trying to set up a group chat between users who are on disparate systems.

    By not providing interop capabilities, the big 3 lose the opportunity to place an ad in front of me. Trillian, Fire, or Proteus start with the advantage of superior connectivity and thus should win almost any IM client decision.

  • I second Michael’s statement. I use Trillian for Windows and Adium for Mac, and have no problem chatting with Yahoo!, MSN, AOL, and more. Yawn!