From...

by Dan Goodin

(IDG) -- Despite the high-profile battles by Microsoft, America Online and AT&T over instant messaging, the smaller skirmishes among companies promising next-generation chat software have gone largely unnoticed. Two companies expected to exchange salvos today are Multimate.net and Cahoots, which are vying for industry position with dueling partnership and funding announcements.

Upstarts like Cahoots and Multimate.net allow visitors to the same Web site to trade messages, providing instant feedback and community content for myriad Web sites, from About.com to Talk City.

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Multimate.net is expected to announce that its Instant Rendezvous chat client will be integrated into the offerings of Commtouch, which provides e-mail services to more than 70,000 Web sites. The pact means that the software will work seamlessly on some of the world's top Web destinations, including those offered by the Discovery Channel, Excite International, Warner Bros. and Ziff-Davis.

Meanwhile, Cahoots is slated to make official that it has closed a $17 million first round of venture funding from Sevin Rosen Funds, New Enterprise Associates, Walden International Investment Group and other backers. Brisbane, Calif.-based Cahoots is still keeping specifics about its product under wraps, but executives say it will launch early next year.

The clear leader in the instant messaging space right now is AOL. Its Instant Messenger boasts more than 30 million registered users; ICQ, which AOL acquired last year, claims more than 40 million. (Registered users isn't an absolute indicator; as with much software, a single user can provide multiple registrations.)

Earlier this year, Microsoft tried to break America Online's grip on the market by making its messenger work with AOL's. After a protracted game of tit for tat – in which Microsoft would briefly make its software interoperate with AOL's, only to be blocked by the No. 1 online service – the software giant recently abandoned the practice. In addition, AT&T entered the fray just last week in announcing it would design its instant messenger to work with AOL's client. America Online vowed to block the move.

Rather than play copycat, the new breed of chat challengers is taking a different tack in trying to outdo the behemoths: offering more features. Pointing to the separation between application and Web browser, Multimate, Cahoots and competitors like Gooey and Odigo all allow people viewing the same Web page to exchange messages about the content. The products are designed to build a sense of community around Web sites and to let merchants to answer customers' questions and help them find products.

For example, Web sites can customize a cobranded version of Multimate's Instant Rendezvous to emphasize particular departments and channels. So far, music community Thedigs.com, Japanese portal iJapan.com and NursingLife, a portal for nurses, have signed on as partners. By contrast, AOL and Microsoft require users to know a person's unique identifier before it is possible for the two to chat. America Online says it is working on adding new functionality to its software.

But Multimate and Cahoots face daunting challenges. Besides lagging behind the industry heavyweights, they also will have to catch up to Gooey, which claims 350,000 registered users and partnerships with CNET, NBCi and Theglobe.com. Gooey is also expected to announce a cobranding and distribution deal with Tunes.com.

Revenue remains another problem. Multimate will be charging cobranded customers a $2,000 setup fee and between $100 and $1,000 based on the average number of visitors using Instant Rendezvous. Cahoots declined to discuss its revenue plans.