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Microsoft Corp. is connecting its Office Live Communications Server with the major public instant messaging networks in a move that analysts say removes a major barrier to enterprise IM adoption.

The Redmond, Wash., software maker is announcing on Thursday a deal with America Online Inc. and Yahoo Inc. to allow its enterprise IM server to interconnect with the companies’ IM services.

The capability will be available in Live Communications Server 2005 for an additional license fee, which has not yet been set, said Dennis Karlinsky, lead product manager for Live Communications Server. LCS 2005, which is in beta, is due out in the fourth quarter of this year.

The feature also will be used to connect the server with Microsoft’s own MSN Messenger service for LCS 2005. Microsoft already had offered a service called MSN Connect to allow LCS 2003 customers to communicate with MSN Messenger users.

“What happens now is instead of a third party in the DMZ (demilitarized zone) between the three of us, now it’s the LCS 2005 box and one role it plays is as an access proxy,” Karlinsky said.

The interconnection will allows enterprise users of LCS 2005 to send and receive messages with users on AOL Instant Messenger, Yahoo Messenger and MSN Messenger directly from the software’s IM client, Windows Messenger, as well as to add members from those networks onto their buddy lists, Karlinsky said.

As for being able to link up directories between LCS and the public networks, Karlinsky said details for doing that were still being discussed.

The federation with public networks follows Microsoft’s announcement in the spring that LCS 2005 also would allow enterprises to link to one another.

Click here to read more about LCS 2005.

Microsoft’s partnership with Yahoo and AOL marks the first time an enterprise IM server has formally planned to connect to all the major IM networks, said Genelle Hung, a market analyst at The Radicati Group Inc., in Palo Alto, Calif.

“That was a pretty big hurdle that was keeping a lot of companies from deploying IM,” Hung said. “Most people want to use [IM] like e-mail. The main purpose is to make IM a communication tool and not a limited one.”

Other vendors have made similar moves at pushing enterprise IM outside of a company’s walls. For example, IBM’s Lotus Instant Messaging (formerly Sametime) enterprise IM product links with AIM.

Hung expects that Microsoft’s move is only the first of more to come as AOL and Yahoo consider connecting with other enterprise IM server products. Part of their motivation is partly money, she said. The public IM networks have struggled to earn revenue from clients and services they largely offer for free.

Both AOL and Yahoo will receive a share of the license revenue for the interconnection with LCS, a Microsoft spokesman confirmed.

“This will encourage service providers to provide integration with these internal [IM] systems,” said David Ferris, president and senior analyst at Ferris Research Inc., of San Francisco.

AOL and Yahoo officials said that working with Microsoft’s LCS made sense because it allows their users to communicate more broadly.

Both companies last month scaled back their own enterprise offerings. Yahoo ditched its separate enterprise IM client, called Yahoo Business Messenger, while AOL stopped offering its enterprise gateway server product.

“We are not an enterprise company and by working with MS, it enables us to be able to provide a high level of services for customers within business settings,” said Lisa Mann, senior director of Yahoo Messenger.

AOL, of Dulles, Va., is focusing on AIM as a network and, for the business market, adding specialized services on top of AIM such as audio and Web conferencing and partnering with enterprise vendors, said Brian Curry, senior director for AIM network services.

The LCS integration will include both AOL’s AIM services and its ICQ IM service, he said.

“We want to see those [LCS] folks connecting to our strong central network,” Curry said.

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