As part of its first entry into Web-based chat, Microsoft is beta-testing Virtual Chat, a software client that offers 3-D chat. The release marks the latest validation of an industry that is rapidly growing, with a plethora of software companies and Web sites offering chit-chat for the multitudes.
"If Microsoft is in the business of supporting platforms, then they also need to support the social aspects," says Linda Stone, director of Microsoft's Virtual Groups. "[Chat] needs to be widely distributed and used as a greater Internet platform."
Web-based chat has exploded in the past year. In a push to build community, sites like Yahoo and Women's Wire are adding chat capabilities to their Web sites, using everything from Java-based chat to plug-ins to the Palace software. Chat has the added benefit that its track record draws advertisers. WebChat, for example, registered its one-millionth user last week. WebChat gets a whopping 5.5 million page views a day - with the average user tallying 50 page views and staying on 35 minutes per session.
"Chat's growing because the tools are starting to get more reliable. [Before] chatting on the Web wasn't nearly as satisfying as chatting on a network," comments Emily Green, an analyst with Forrester Research. "A lot of content sites are now looking to extend the content experience."
The big networks have been capitalizing on chat for years. During the days of pay-per-hour fees, chat was a lucrative money-maker for networks like AOL. An older version of Virtual Chat, based around a 3-D world with 2-D avatars, was one of the more popular areas of MSN.
Now, along with MSN's Comic Chat, Virtual Chat is being developed by Microsoft's Normandy Group, which is taking MSN applications and remarketing them as licensed software products for Web developers and ISPs. Expect to see Virtual Chat on a corporate site near you sometime soon.
The lust for chat has also spawned a passel of smaller start-ups. So far, the client dominating the field has been Ichat, which is signing up big-name clients like Yahoo and Netscape. Numerous other companies are also working to perfect the application and compete with entrants like Microsoft.
"We have a lot more experience with Web-based chat than AOL or Microsoft. We've spent two years developing this," says Bradley Birnbaum, CTO of the new Web chat company eShare, which, with Softbank's bankroll, is signing up names like Lotus.
Still, without big bankrolls or recognizable branding, smaller companies are already falling by the wayside. "The market won't support 40 different products, and it's probably going to devolve very fast," says Green.
Although Microsoft is the only company so far that has announced its intention to open its chat software up to the Web, chat industry companies are sure the rest aren't far behind. "As Web-based chat becomes more and more well known, you'll see people switch to the Internet," says Andrew Busey, founder of Ichat. "If you look at AOL and CompuServe and Prodigy, chat makes up a huge percentage of what is popular in their services. So it's natural they would move it to the Internet."
