Bitter rival IM giants get lovey-dovey

After years of mudslinging, AOL, Microsoft and Yahoo! on Thursday will make a surprising overture toward peace in the instant-messaging wars.

The companies will announce that later this year Microsoft's Live Communications Server (LCS), which offers instant messaging for corporate users, will connect with AOL Instant Messenger, Yahoo! Messenger and its own MSN Messenger.

However, the three public IM clients will still not connect with one another for public users. Instead, it means corporations that use LCS will allow employees to chat with the 'big three' public IM services as well.

Microsoft will pay AOL and Yahoo! a royalty for connecting to LCS. The companies declined to elaborate on whether these payments will be based on the number of LCS users connecting to AOL and Yahoo!.

The connections will be based on direct links between LCS and AOL and Yahoo!'s IM servers, which means LCS users will see their Yahoo!, AOL and MSN buddy lists appear when they log on and be able to instant message their contacts. LCS users will not get the same features as the public AOL or Yahoo! clients, such as unique emoticons or gaming perks.

The IM connectivity with AOL and Yahoo! will launch on a trial basis at the end of the year when LCS 2005 launches, and then launch officially during the first half of next year, Karlinsky said.

After years of bickering on IM interoperability, the LCS agreement may mark the beginning of a welcome recognition of the value of separating client software from networks and services, said Lou Latham, an analyst at Gartner.

"It really is quite remarkable that all three of them came together," he said. "Early on, I was not entirely convinced they were even going to be able to convince the people at MSN to do it."

Jim Hu writes for News.com