Instant Messaging grows up and gets a job
Instant Messaging applications have soared in popularity, but nobody's buying them. As with e-
mail, Web browsing, and music downloading, the most heavily used IM services are free. This
shows no sign of changing.
The four major public instant messaging applications are AOL Instant Messenger (AIM), ICQ,
MSN Messenger, and Yahoo Messenger. America Online's parent company Time Warner Inc.
runs the first two, while Microsoft and Yahoo Inc. run the services that bear their names.
As with SMS and music downloading, IM services first became popular with the kids in the 1990s.
They invented their own shorthand phrases, and began using combinations of punctuation marks
to signify smiles or frowns. A decade ago, Internet Relay Chat was a cumbersome but popular
application on the college networks, and America Online allowed its subscribers to send short
little pop-up messages to each other's screens. IM was born.
Of today's Big Four, ICQ is the oldest on the open Internet, tracing its beginnings back to 1996
and a tiny Israeli company called Mirabilis Ltd. In 1997, AOL unbundled the formerly proprietary
AOL Instant Messenger service as a standalone application that could be used on the open
Internet. In 1998, AOL acquired Mirabilis for US$287 million in cash. Microsoft launched MSN
Messenger a year later. Yahoo followed soon after.
If only somebody could figure out how to make some money on these services!
Four years ago, innovative companies began turning IM into sophisticated corporate applications
they could sell on a per server and per seat basis. Chat rooms became conferencing centres and
buddy lists became presence indicators. Even AOL and Yahoo began developing enterprise
editions of their public IM services. Sadly, after four years of trying, most of these efforts remain
stuck at the starting gate.
One notable exception has been IBM, which through its Lotus Sametime application (now known
as IBM Lotus Instant Messaging and Web Conferencing) has been able to penetrate roughly 10
million business desktops. That's a tiny fraction of the total worldwide IM user base, but it's a
major portion of the paid-for corporate base.
The problem is all that free stuff going around. Not only is it all free, but it also connects a user
with literally hundreds of millions of people both inside and outside their workplace. It can connect
an office worker with friends, neighbours, children, parents, and even complete strangers.
The client software is simple to download, takes up relatively little screen space, and can be
safely hidden from view if a supervisor should get curious about why there's so much typing but
so little work getting done.
It's not just for kids any more. IM has entered the workplace. Just as mobile phones and SMS
made workplace rules about personal phone calls seem quaint, IM services are cutting corporate
e-mail usage policies to shreds.
Each of the four major IM services is capable of transferring large files to and from the desktop,
creating a new type of security hole for IT managers. Proprietary data can leave the corporate
network, and malicious viruses can enter, not to mention the loss of productivity that can be
blamed on text chats.
Presence detection is at the cutting edge of corporate connectivity, but most IM clients have long
allowed users to construct ‘buddy lists’ of all their frequent contacts. AIM allows a user to put
anybody on his or her buddy list, which then can signal that user when a given buddy comes
online and goes offline. It's a stalker's paradise. Yahoo and MSN require the prior consent of the
buddy, as does ICQ. But ICQ now includes a special routine that will periodically troll the
messages of a user's Outlook inbox, looking for matching e-mail addresses of people it knows to
be fellow ICQ subscribers. Some or all of these newfound matches can then be invited to join the
finder's buddy lists.
One of the major downsides of public IM services is the amount of spam they're beginning to
attract. ICQ is particularly rife with spam, and it's primarily of the pornographic flavour. Not a day
goes by when some third world ‘lady’ doesn't inquire if the user is looking for company, or
perhaps just some ‘photos’. This new flavour already has a name: spim, as in spam on IM.
Auditability is another concern, particularly if IM is used to transact business. There are ways to
make a recording of IM sessions, but these for the most part are aimed at parents nervous about
what their teenagers are downloading. Spector Pro by SpectorSoft Corp. and SpyAgent by
Spytech Software and Design Inc. are among the many applications that will record all IM
sessions and other keyboard activity. Traditionally, these applications are installed by anxious
parents unbeknownst to their wayward children, but they also can be used by an employer to
record the activity of their employees. It's questionable whether this practice would survive a data
privacy challenge, because unlike the often-tapped corporate-owned e-mail systems, these are
more like articles the employees bring from home.
Employers worried about the security holes in the public IM services frequently turn to services
such as Lotus Sametime as an alternative. These corporate IM services are bundled with archival
systems, encryption, and most importantly, centralised IT department control. But who wants to
chat under the boss' watchful eyes? Inevitably, the corporate IM clients get only light usage while
all the heavy chatting continues on one of the public IM networks.
American Online and Yahoo have tried to penetrate the corporate market with products such as
the AOL Instant Messenger Enterprise Gateway and the Yahoo Messenger Enterprise Edition.
Those efforts have largely failed, and have been discontinued. For interested businesses, AOL
continues to bundle its instant messaging clients with the business applications of clients such as
Reuters, but its own corporate sales efforts have now ceased.
Microsoft, meanwhile, continues to sell its Live Communications Server platform into corporate
accounts with some success. But it's nowhere near the runaway hit that Outlook and Exchange
have become. In terms of free stuff, MSN Messenger, Hotmail, and the Internet Explorer Web
browser are where Microsoft has all its seats. Microsoft has estimated its MSN Messenger
installed base at 130 million users worldwide, and its traffic volume at 2.5 billion instant messages
per day. That's all on the public network, beyond the control of corporate IT departments.
This isn't expected to change. In a recent study, the Radicati Group indicated that most future IM
growth in the workplace will take advantage of the public IM networks. By 2008, the company
expects 670 million IM users in the workplace, of which 88% will be using public IM clients and
only 12% will be using corporate IM servers. The Radicati study forecasts workplace IM revenues
of $413 million in 2008, which the calculator reveals to be a mere 62 cents per user per year.
Selling postage stamps might be more lucrative.
Osterman Research estimates the current workplace installed base for AIM at 14 million users,
for MSN Messenger at 12.6 million, and for Yahoo Messenger at 11 million. Estimates for the
total worldwide non-workplace installed base are a bit harder to come by. The problem is that
services such as ICQ will announce only how many IDs they have issued, not how many remain
active or are used during any given period.
The American Web audience measurement service comScore Media Metrix recently tabulated
25.4 million unique visitors to the AIM Web site; 24.4 million for Yahoo Messenger; and 24.3
million for MSN Messenger. As of June 2004, the company said each service had roughly a 16%
reach of the estimated 156.4 million U.S.-based Internet users. But the company hasn't measured
the worldwide pull of these services, which in the case of ICQ in particular is significant.
ICQ has estimated it has issued 135 million unique IDs over the eight-year life of its service. But
AOL estimates its current ICQ user base at 20 million active accounts, and its AIM user base at
36 million active accounts. Further complicating the picture is the tendency of users to sign up for
both, or for all four of the major IM services, sometimes with multiple screen names per service.
Islands of Communication
For e-mail industry veterans, the reason is familiar. Each of the services operates as an island
unto itself. There's no X.400 standard in IM, at least none that all the services will support. They
each have realised that proprietary IM clients maintains control -- not over what is said or what
files are downloaded, but control over advertising and integration with other Web-based services.
Some ancillary services such as multiplayer games now require paid subscriptions. It's not an
understatement to call IM clients the strategic gateway to a diverse mixture of free, paid, and
For instance, with one click a Yahoo Messenger user can log into their Webmail account, look up
local sports scores, do some online shopping, or check their calendar. Once they've logged into
Yahoo Messenger, their single signon follows them around through the entire universe of Yahoo
services. A special headline keyword service allows them to follow a specific company or a topic
by receiving links to the latest press releases moments after they cross the wires. In recent
weeks, Yahoo has even integrated its LaunchCast streaming music service, allowing it to play a
user's favourite songs through the chat client. In future editions, this might even work with mobile
phones. Right now the basic music service is free, but Yahoo is heavily promoting the enhanced
version, available only through a paid subscription.
Microsoft's MSN Messenger can be left running in background mode, where it will notify the user
instantly when an e-mail arrives in their Hotmail inbox. It can simply play an alert sound or it can
use a pop-up window to signify both the sender and the subject. These are the sorts of
sophisticated integrations that e-mail vendors used to charge money for. Now it's all free and
available to the average 16 year old.
Yahoo and MSN also provide tight integrations with inexpensive Web cameras that allow the user
to be seen as they type. They also allow user to speak into microphones and be heard in a chat
room. As with most text-only chat rooms, these frequently turn into unintelligible arguments over
sports, girls, or music, but at least in theory they could be used to host formal business
discussions with co-workers dispersed over a wide geographic area.
While most chat rooms are open to the public, some can be set to be open by invitation only. It's
not exceedingly secure, but then again neither is the Webmail that many executives now use
while they're on the road. Travelling executives could even drop into a third world Internet cafe
and turn on the Webcam if the matter was urgent.
The problem again is that everyone needs to be on the same public IM service, and in the case of
a private multi-user conference, in the same chat room. The usual solution is to download all four
IM clients, and run them all in background mode at the same time. As chat matters require, the
clients can be switched from background to foreground mode. This hardly taxes the typical
desktop PC, but it does require a constantly available Internet connection (or perhaps a mobile
Each service allows the user to signify their status to other users – available, busy, away, do not
disturb, etc. – and some even allow the user to be connected in ‘invisible’ mode. ICQ goes a step
further and allows the user to be selectively visible to only certain other users, and invisible to the
rest. Several services allow users to create custom ‘away’ messages that are instantly returned to
the correspondent. These can include alternative phone numbers or an e-mail address, and in the
case of AIM, the parroting of the sender's screen name (Hi so-and-so!) plus the date and time.
There are even now meta IM applications that can manage simultaneous connections to each of
the popular public IM services. Trillian and Trillian Pro, applications published by Cerulean
Studios, can connect one user to multiple accounts on the four major IM services as well as on
Jabber and Internet Relay Chat (IRC). The software combines each IM service's buddy lists into
one common and more manageable list. But it doesn't allow the user of one service to chat with
the user of another service. That remains a closely-guarded treasure. Some public IM services
have been known to change their protocols merely to thwart those who reverse-engineer IM
clients to connect with multiple services simultaneously.
The so-called IM wars began in 2000, coincidentally when Microsoft was fighting for IM market
share and when America Online was in the process of merging with Time Warner. Bill Gates and
others even testified before American regulators about how unfair it was to allow AOL to keep its
IM service closed off to outsiders. Their theory was that once this near-monopoly was combined
with Time Warner's Road Runner local cable modem monopolies, children would wail and
livestock would die. Well, maybe that's a bit overstated. But to the delight of competitors, as a
condition of that merger AOL was prohibited by regulators from enhancing its service to take
advantage of the booming installed base of Web cameras.
It may all seem very childish now, but then again so did texting a few years ago. Chances are
good that any twenty-something employee you see is already secretly running at least one IM
client on their workplace machine. But you won't find it. They know how to hide it from their
elders. If you ask nicely, though, they might show you how to hook yourself up. In a few years,
everybody will be typing madly in their cubicles and nobody will be doing any work. Now that's
Eric Arnum maintains accounts on each of the four major IM services, strictly for business use
Article written by Eric Arnum