Yahoo Yanks Enterprise Instant Messaging

The Sunnyvale, Calif.-based Internet services company had updated its Business Messenger product only last October, but company executives opted to pull the plug on the product and exit a market that already includes corporate IM offerings from America Online, IBM/Lotus and Microsoft.

Speaking through a spokeswoman, Lisa Pollock Mann, senior director for Yahoo! Messenger said that by offering "an Instant Messaging product that is based on a single platform, we are even better prepared to address market needs by offering features based on segmented needs."

Instant messaging took the consumer world by storm nearly a decade ago and has crept steadily into corporations. Lotus, now IBM's Lotus Software Group, helped pioneer business-ready IM with Sametime several years ago, marketing it as a secure alternative to the notoriously vulnerable consumer products. Consumer IM giants AOL, Yahoo and Microsoft later followed suit with their own enterprise IM offerings.

Yahoo's departure from the space signals a return to its consumer roots and, perhaps, shows that the market for corporate IM has more than enough contending vendors. Earlier this month, AOL launched expanded audio and Web conferencing perks for its corporate IM via partnerships with Lightbridge and WebEx. Building on those alliances, AOL could offer voice conferencing and Web conferencing to AOL Instant Messaging (AIM) users on demand, the company said.

Meanwhile, Microsoft is testing beta two of its Live Communications Server 2005 offering, code-named Vienna. Microsoft competes in on-demand conferencing with Live Meeting, once known as Placeware.

Industry observers say AOL's alliances caused a ruckus among IM vendors, since many had expected IBM and WebEx to ink a similar deal. Some observers say the new WebEx alliance gives AOL a channel to crack corporate accounts. AOL now claims 150 customers for its business IM product, and WebEx is a leader in hosted Web conferencing.

"The problem with AOL and Yahoo is that they don't understand how to market and sell anything to businesses," said a rival IM executive, who requested anonymity. AOL's WebEx play, however, could give AOL a real channel for pursuing corporate accounts, he added.

Although IM has market penetration, vendors and solution providers have struggled to profit from the technology. Yet the advent of new compliance regulations in the financial services and health-care industries, which mandate security and privacy safeguards, are spawning big business opportunities, observers said. For instance, companies like Akonix Systems, IMLogic and FaceTime Communications--which offer gateways, security and archiving infrastructure--have emerged to fill the gap between wide-open consumer IM and big-business application needs.

Rob Wolfe, president of AvcomEast, said the Silver Spring, Md.-based solution provider often works with FaceTime in its corporate accounts. "Corporate IM and peer-to-peer management discussion has opened up new vertical markets and truly given us a product that fulfills business needs in corporate environments," Wolfe told CRN in an interview conducted via IM.

Wolfe said he frequently sees AIM, Yahoo Messenger and Microsoft Messenger in corporate accounts. But with FaceTime, AvcomEast can bolster the security of that infrastructure, he said.

"IM is out of control and cannot be effectively handled by the standard network infrastructure," Wolfe said. "FaceTime licenses technology from the major IM companies and knows how to manage their communication."

FaceTime also can combat an emerging scourge: spim, or IM's version of spam, or unsolicited e-mail. "The fact is, most IT shops' compliance requirements have been focused on e-mail, not all messaging," Wolfe said. "IM needs to be treated with the same attention and focus."

This story was updated with Yahoo comments.