Yahoo, WebEx merge IM and Web conferencing

Users of Yahoo’s enterprise instant messaging (IM) product can now launch Web conferences right from their IM client, Yahoo said Thursday.

The marriage of IM and Web conferencing, both relatively new to the enterprise IT space, is the result of an agreement between Yahoo and WebEx Communications, a San Jose, California-based Web conferencing company. The companies plan to officially announce their product integration at the IM Planet event in San Jose, which starts Oct. 15.

Yahoo and WebEx announced their deal in June, but are now delivering an integrated product. Both companies hope for bigger share of the growing IM and Web conferencing market by integrating and selling each other’s services.

Clicking a WebEx button in Yahoo Business Messenger takes a user directly to the WebEx Meeting Center without the need to log in. Participants can also be invited to a Web conference via Yahoo IM. A link will take them directly to the conference, again without the need to log in, Yahoo and WebEx said.

“We want to make meetings more spontaneous and real time,” said Steve Boom, senior vice president of Yahoo Enterprise Solutions. IM will also make Web meetings more interactive, he said.

Yahoo and WebEx have also integrated billing and technical support. Customers can get a single invoice for both the Yahoo and WebEx services and can call one number for help with both services, the companies said.

Yahoo charges $30 per user per year for Business Messenger, WebEx conferencing costs $0.45 a minute. Both providers offer volume discounts, they said.

Delivery of the Yahoo and WebEx product comes as rivals such as IBM and Microsoft  are vying for a piece of the up-and-coming market. Microsoft on Oct. 21 will officially introduce its Office Live Communications Server enterprise IM product. The company introduced its Office Live Meeting Web conferencing service last month.

IBM is considered the incumbent in this space with its Lotus Instant Messaging and Conferencing, previously Lotus Sametime. IBM held about 50 percent of the market in terms of revenue in 2002, according to market researcher IDC.

But Yahoo and WebEx don’t fear Microsoft or IBM because those companies require a user to install software, Boom said. Businesses don’t want to run more costly servers, but want IM and Web conferencing as a service, delivered much like telephony, he said.

Robert Mahowald, research manager at IDC in Framingham, Massachusetts, disagreed. “Even though IT shops have been diminished in the last few years and even though running real-time applications versus non-real-time applications is a whole different ball of wax, we think that CIO’s long term plans are for bringing these resources in house,” he said. “Other hosted messaging companies have not fared well.”

Mahowald does see integration between IM and Web conferencing as “a pretty natural collaborative step.” Many IM sessions result in phone calls or expanded online meetings and making the link easier makes sense. “There needs to be a complement to IM,” Mahowald said. He expects Microsoft to combine its products and America Online Inc., another vendor in the enterprise IM space, to find a partner.

Enterprise IM was a $167 million market in terms of worldwide revenue in 2002, Mahowald said. IDC forecasts a compound annual growth rate of 28 percent until 2007, when the market is expected to reach $570 million. The Web conferencing market amounted to $469 million worldwide in license and maintenance revenue and is expected to top $1.1 billion in 2007, a compound annual growth rate of 18.9 percent, according to Mahowald.

Yahoo is initially targeting mainly large North American companies with its enterprise IM product and is gradually expanding its focus to mid-sized companies, Boom said.