Microsoft Brings Group Chat Firm Into Its Fold

Microsoft (Nasdaq: MSFT) has acquired one of the few providers of persistent, or group, chat functionality, a niche enterprise tool that is gaining rapid adoption, especially in the financial services areas.

The software giant bought Parlano, best known for its MindAlign application, for an undisclosed sum. Parlano provides real-time online communication and collaboration capabilities to employees working on the same project.

Microsoft said it will incorporate MindAlign into its Office Communications Server (OCS) and Office Communicator, making group chat part of the standard client access license for Office Communications Server 2007 Software Assurance customers.

Emerging Category

Persistent chat has the potential to add significant value to several industries, Rob Koplowitz, principal analyst with Forrester Research, told the E-Commerce Times. "Financial services -- trading, in particular -- has seen a lot of benefit from it. And there have been some interesting cases of massing expertise around health issues in chat rooms."

Persistent chat has broad horizontal applicability, Koplowitz noted.

"It is one of the technologies that spreads virally as people see value in it. But I don't think Microsoft acquired Parlano strictly because this is an emerging market that it wants to specifically target," he said. "Rather, it is doing it to strengthen its existing presence capabilities."

Indeed, it is clear that the acquisition is a move to enhance Microsoft's unified communications server and client software products that already offer a range of presence, instant messaging, conferencing and VoIP capabilities.

If Microsoft hadn't acquired the functionality, it surely would have built it, Mike Gotta, principal analyst with the Burton Group, told the E-Commerce Times.

The acquisition opens to door to additional product development possibilities, he pointed out. "Conceivably, this functionality could be integrated with Office SharePoint Server to develop a more robust social networking offer."

A Unified Strategy

The first order of business for Microsoft will be to solidify its unified presence portfolio and gain strides in the persistent chat niche, Gotta suggested. Parlano's industry bona fides will help with that -- the company has been around since 2000, and it is battle-tested in the market. It is also built on top of Microsoft software, which means product integration should be relatively simple.

Parlano's technical specs are a plus to Microsoft and the constituencies it wishes to target, Gotta observes in a blog post:

Competing With IBM

At bottom, Parlano is a strategic acquisition, because its functionality embodies part of what Microsoft envisions for its own unified communications strategy . What is just as significant, Gotta remarked, is that it will give Microsoft a leg up on IBM's (NYSE: IBM) work in this area.

IBM outlined the next phase of its own unified communications strategy at VoiceCon Fall 2007, which took place earlier this month. Those plans include a new release of IBM Lotus Sametime software, along with a road map for expanded Lotus Sametime family functionality. One of the anticipated items is IBM Lotus Sametime Entry 8.0 software, which will let users share presence information and exchange encrypted, rich-text IMs (instant messages) with one another.

IBM recently announced its own acquisition in the group chat niche: WebDialogs, a privately held provider of Web-conferencing services, which offers functionality similar to Parlano's.

"I don't think that Microsoft ran out and acquired Parlano after hearing a few weeks ago of the WebDialogs acquisition," Gotta said, "but it is clear that this is where the next generation of unified communications is heading."