October 19, 2004

By Melanie Turek, Principal Research Analyst, Nemertes Research LLC

The announcement by Microsoft (NYSE: MSFT) that it will adding improved presence and telephony capabilities to its IM client supports Nemertes’ prediction that instant messaging, telephony and presence are converging within applications, and creating new competition for the desktop.

The new enterprise IM client, code-named Istanbul and due by the end of Q2 2005, replaces Microsoft’s Windows Messenger software. It adds the ability to tap users’ Outlook calendar information and the ability to connect to traditional or IP-based telephones, so users can answer or re-route incoming calls from their PCs. Microsoft also plans to incorporate buddy lists from AOL, Yahoo and MSN Messenger in Istanbul, which could deliver some measure of interoperability.

Clearly, Microsoft is pursuing its goal of embedding presence into productivity applications. But it’s also butting up against the telephony world. Today, vendors such as Nortel and Avaya offer soft phones that let users manage their calls on their PCs in much the same way Istanbul will. The difference: those products are significantly more advanced than Istanbul, and often include find-me/follow-me capabilities, unified messaging and other capabilities.

The complete Impact Analysis is available to Nemertes clients. For more information, please contact Chris Zimmerman at christine@nemertes.com