Microsoft announced early today that users of Microsoft's Office Live Communications Server (LCS) 2005 will be able to connect with AOL, MSN and Yahoo networks, providing the capability to share presence and, eventually, directory information between the three for enterprise users. The announcement comes less than a month after both AOL and Yahoo announced significant scalebacks in their enterprise presences and largely explains the value Yahoo saw in changing its IM protocols to block third-party clients. The deal is driven, according to some published reports, by Microsoft sharing revenue from the additional licensing fees it will collect for the capability to interoperate with the other two companies.

Statements from representatives of the three companies signalled that, while something of a breakthrough in terms of scope, the deal is less of an exclusive coup for Microsoft than it is the logical extension of AOL and Yahoo's desires to figure out a way to earn revenue from their IM networks. Less-major players have made similar deals with one or the other of the three companies, including IBM, which has agreements with AOL that allow its Lotus Instant Messaging customers to connect with AOL users outside the company network.

Yahoo's vice president of communications products Brad Garlinghouss echoed the overall pragmatism AOL has displayed, noting that "By working strategically with leaders in the enterprise IM environment, we are extending our presence and providing our business users with a productive, private and more secure experience."

Some details of the deal remain unsettled. While it's plain that users of LCS 2005 will be able to communicate with members of Yahoo, AOL, and MSN and add users on those networks to their buddy lists, it's unclear how the details of directory integration will be handled between the three networks.

Industry Applauds Announcement
If the big three IM players are happy about today's news, you'd have to describe the three leading gateway server providers as downright giddy. Companies such as Akonix, FaceTime and IM Logic offer a variety of management, archival and security products that allow enterprises to use a combination of public and private IM services as if they are one application. All three companies have partnered in the past with AOL, Yahoo and Microsoft to offer enterprise-level services.

IM Logic's CEO, Francis deSouza described today's announcement as the "most significant news in the industry since instant messaging was first launched in 1996." deSouza likened the impact to the effect SMTP (Simple Mail Transfer Protocol) had on the e-mail market. Just as SMTP created a universal way to send and receive e-mail from one server to another over the Internet, today's announcement could be the first step to real interoperability. "It will create an ecosytem just as e-mail did for achriving, virus and spam," deSouza said.

For enterprise customers, it adds a level of stability to a product category that is as feared by IT managers as it is loved by users. "It gives IT departments a level of comfort," deSouza said.

Calling the news "the most exciting thing that has happened in this space," Dmitry Shapiro, founder and chief technology officer at Akonix, agreed that this is the kind of move customes have been waiting for. "They want interoperability. Some customers have tried Trillium and found that didn't work. A lot of people have been sitting on their hands waiting. This will open the flood gates."

Shapiro also said that AOL and Yahoo are wise to take this path to finding profits in the enterprise IM space. "This is the right way for them to do it. AOL has its network, Yahoo has its network. They have value. LCS will provide the connectivvity."

Christopher Dean, senior vice president of marketing and business development at FaceTime, agreed with deSouze that today's announcement will mean that enterprise instant messaging could become as big — and as problematic — as e-mail. That, of course, means opportunity for companies such as FaceTime that offer security and management of IM. "Enterprise IM has been a closed environment. It didn't traverse the public cloud."

Dean said products such as FaceTime's anit-spim tools will become increasingly important. "Now you are introducing 100 million AOL users into your network."

Dan Muse contributed to this report