Lycos deal flashes AOL's determination

Summary:Its latest licensing arrangement underscores its intent -- to dominate the potentially explosive market for instant messaging.

America Online Inc.'s deal to license its instant messaging software to Lycos itself flashed a message to the world: It signaled AOL's determination to dominate the just emerging but potentially explosive market for the technology.

While Microsoft Corp. (Nasdaq:MSFT) has made its protocols open to anyone who wants to sign up, AOL (NYSE:AOL), with some 45 million instant messaging (IM) users, has now managed to strike licensing deals with Internet service providers such as Earthlink (Nasdaq:ELNK) and MindSpring (Nasdaq:MSPG) as well as corporate intranet firms such as Lotus and Novell (Nasdaq:NOVL).

"What it comes down to is that AOL is already safely in the zone, where nothing short of a concerted effort by all of its competitors could stop it," said Lucas Graves, analyst at Jupiter Communications in New York.

AOL's first mover advantage has not been shaken by criticisms from the instant messaging community about its refusal to open up its protocol.

Microsoft has tried to play the good cop to AOL's bad cop image by letting developers look at its protocols. The company has signed up a few developers, including Tribal Voice, who've agreed to use to use its software.

Despite these efforts, Microsoft appears to be making little headway in its rivalry with AOL. It problem: The majority of instant messaging users are already on AOL's network -- and, as a result, that's where new users want to be, even corporate customers.

"Even the focus of those efforts is for corporate intranets, I couldn't imagine they wouldn't license (software) without ability to communicate outside the firewall. That's key," Graves said.

Topics: Microsoft, IBM, Networking

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