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Software industry

Instant Messaging Wakes Up as a Business Tool

Strategic Insights

— 2 min read

Instant messaging, once a personal online communication method, is rapidly transforming into a business tool, with companies like America Online Inc., Yahoo! Inc., and Microsoft Corp. leading the charge. This shift has spawned a new subindustry providing tools for monitoring and securing corporate instant messaging systems. Venture capital firms are pouring in cash, with three instant-message security and monitoring companies, Akonix Systems Inc., FaceTime Communications Inc., and IMlogic Inc., receiving $43 million in funding within the past 10 months.

Key Takeaways:

  • The use of instant messaging in enterprises is growing at an unprecedented rate, with 78 million users expected by the end of 2008, up from 42 million in 2004 (Radicati Group Inc.).
  • Companies will spend $413 million on IM-related products and services by 2008, a significant increase from $131 million in 2004 (Radicati Group Inc.).
  • Instant messaging is being widely adopted in the financial services industry, where real-time communication is crucial, creating a large market for security and monitoring products (Gartner Inc.).
  • Three instant-message security and monitoring companies, Akonix Systems Inc., FaceTime Communications Inc., and IMlogic Inc., have received $43 million in venture funding within the past 10 months (various sources).
  • Akonix Systems Inc. raised $11 million in a second round of funding in December 2003, while FaceTime Communications Inc. secured $16 million in a third round of funding in August 2004, and IMlogic Inc. raised $16 million in a round led by Crosslink Capital in May 2004 (various sources).
  • The VCs who funded these companies see them as potential acquisition targets, but also aim to build independent businesses with $100 million in revenue (David Orfao, General Catalyst Partners) and "build this business up to $100 million [in revenue] and figure it out from there" (David Orfao, General Catalyst Partners).

Statistics:

  • 78 million users of IM business accounts expected by the end of 2008, up from 42 million in 2004 (Radicati Group Inc.).
  • $413 million spent on IM-related products and services by 2008, up from $131 million in 2004 (Radicati Group Inc.).
  • $43 million in venture funding for instant-message security and monitoring companies within the past 10 months (various sources).
  • 11 million in funding for Akonix Systems Inc. in December 2003.
  • $16 million in funding for FaceTime Communications Inc. in August 2004.
  • $16 million in funding for IMlogic Inc. in May 2004.

Sources:

  • Gartner Inc.
  • America Online Inc.
  • Yahoo! Inc.
  • Radicati Group Inc.
  • TheDeal.com
  • Sharon Wienbar, BA Venture Partners
  • Sharon Wienbar, Sharon Wienbar, BA Venture Partners
  • Leo Spiegel, Mission Ventures
  • Phebe Waterfield, Yankee Group
  • David Orfao, General Catalyst Partners

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