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Help me understand how IBM, Microsoft, or anyone else will make money on Instant Messaging.

By Andrew Pollack on 08/25/2005 at 07:11 PM EDT

Google is in the mix now with their own IM client -- including voice traffic. Why? Why not? Its easy now. All you need is plenty of bandwidth and some big servers. Pretty much all the connection protocols, encoders (CODECS), and so on are available now as standards. There are even good commercial and open source stacks which implement most of them. I know, I'm using several in the current project I'm working on it. Making an IM community client would be trivial with the stuff available now.

Tell me then, how IBM or Microsoft wish to make money with their products. SIP servers and CODECS are pretty much a commodity item now, so where is the value add? Is it in screen sharing, group calendaring, and online meeting processes? Aren't these too headed for comoditzation? Isn't their very commodity nature the thing which makes them most powerful -- that ability to join people in these meetings who aren't necessarily part of the same infrastructure?

I'm sure there are some customers who require special items like secure logging and so on -- but it seems to me that is something best done at the network layer anyway. Just scoop the data up as it goes by the routers (true, switches make that a little more challenging, but not hugely so).

Instant message itself is not the real battle here. For both IBM and Microsoft both, a solid communications infrastructure provided by Sametime, Live Communication Server, or Workplace Collaboration Services is going to be critical -- but not as an instant messaging platform. Its critical because it will provide the session control and data pipeline for traffic between developed applications (in Workplace Designer or Visual Studio respectively) and a back end secure storage mechanism (DB2 & Domino, SQL Server & Infopath).

From here, the key development paths a few years out look like this (not in order of preference, necessarily) -- I'm sure I'll get comments and updates, many quite insightful and accurate. I'll add this in another font to indicate that they've been added, so as not to spoil the context of the original.

Andrew's Prediction* of Likely Development Platforms - 2007 - 2008 Timeframe

* of course things change, particularly product names -- but largely this is the way I see it looking
Front End Development
Session & Data Pipeline
Directory Services
Back End Logic
Unstructured Data
Structured Data
Open Source
Java
Eclipse
Asterisk
LDAP

New Standard
TBD
J2EE

Perl
JSR170 Repositories
MYSQL, Other RDB's
IBM / Lotus
Lotus Domino Designer

IBM Workplace Designer
Sametime

IBM Workplace Collaboration Services
Domino Directory

LDAP
(J2EE) Websphere, Workplace & Portal

Lotus Domino
Lotus Domino

Future DB2

Both also as JSR170 repositories
DB2

Cloudscape
Microsoft
Visual Studio
Live Communications Server
Active Directory
IIS
InfoPath
SQL Server

Conclusions

From where I stand, Open Source has catching up to do in many cases, but good solid entries in all categories.

At the front end, IBM and Microsoft have very different platforms, both are quite good but focused very differently. I use and like both. Open Source is weakest at the front end presently.

For the pipeline, I think Asterisk is outstanding (you didn't really think it was just about VOIP did you?) and may be the most compelling -- particularly since I see this as a commodity play, with little benefit to gain from proprietary servers at great expense.

I don't see a good directory solution really -- I think a new standard will emerge from the need to support ever larger SIP implementations. Clearly IBM knows how to do this well with LDAP and Lotus Domino, while Microsoft continues to have a decent enough strategy if you're willing to be locked into a Win32 dominated infrastructure.

At the back end, nothing beats Lotus Domino for cost/benefit, particularly since it incorporates full support for Java and thus encompasses the open source strategy as well. IIS is a neat platform, but has a long way to go to convince me it is robust enough to be a real player without major rewrites.

Domino owns the unstructured data world right now. JSR170 is critical to the future, and I fully expect to see Domino and DB2 as some of the first implementations. I know nothing at all about Infopath so I won't compare it.

Structured data is boring and mature. Nothing to add there.


There are  - loading -  comments....

Volume?By Bruce Perry on 08/25/2005 at 10:07 PM EDT
My own thoughts on this are...By Peter on 08/26/2005 at 11:46 AM EDT
For Public IM Solutions ? How about a growing community / market Intelligence
and advertising income to start with
that's exactly my point.By Andrew Pollack on 08/26/2005 at 03:57 PM EDT
Google may (MAY) make money on the ad space. IBM and Microsoft definately
won't (speaking now of Microsoft's corporate platform, not the free msn thing).

The whole "eyeball space" or "screen realestate" VC arguement got so stale in
years past I have very little patience for it from any company other than those
established already with serious advertising credibility. Google clearly has
that, and Yahoo I suppose. Even most of the print press with their own
websites haven't turned a profit on web advertising.
Not sure I agreeBy Carl Tyler on 08/29/2005 at 12:06 PM EDT
The same arguments on how will IBM or MS make money form IM can equally be
applied to email services. How can IBM/MS make money when there are all these
free services out there?

There are a few reasons why enterprise IM will continue to be around for a few
years, the key one being control. Companies like to know they are in control
oif their environments and their services. If they need to they can still have
IM capabilities within their organization whilst being disconnected from the
rest of the world. They also remove the fear of it being "turned off" on
them. None of the free services offer SLAs or committment to keep offering
service in the future, unlikely they will turn it off, but you never know.

So the how can companies make money with IM? Consumer IM, for free is a tough
calculation, enterprise IM is easier to do the math on.


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