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The Bloor Perspective: IM compatibility, mighty Borland and QXL's turnaround
This week Robin Bloor and his team consider some good news in the instant messaging field, the resurgence of Borland and the latest figures from auctioneer QXL...

By Bloor Research

Published: Monday 11 November 2002

Instant messaging has long been a technology of promise. The idea of being able to talk to anyone, anywhere, through a tiny console brings enormous power to users but its power has been blighted by infighting across the industry. This month, however, that's all changed. The IM operators and regulators are getting interoperable.

AOL has finally buckled to the pressure to include a level of compatibility between its own and the hugely popular ICQ instant messaging systems. This has been an ongoing struggle which featured in the AOL/Time Warner merger, which said AOL couldn't launch an advanced IM service until it offered interoperability.

The latest iteration of the AOL client will enable ICQ members to be added to the 'buddy' list. Closer integration between the clients, which is the only real issue, will follow.

The next bit of good news came from the highly influential Internet Engineering Task Force (IETF) which has just stated it will back the Extensible Messaging and Presence Protocol (EMPP) group which is planning to deliver a common, open standard for instant messaging. This adds to the SIMPLE protocol and better still adds to the chance of IM becoming a platform - and vendor - independent open system.

Instant messaging is likely to be as big as email, once it clears these final interoperability issues. In many corporations, instant messaging can provide backbone support to disparate projects, open up whole new channels of communication, and prove essential to the success of many an initiative. That's before you even consider the suitability of IM for online service help lines and the like.

This is a wonderful doubling up of great news for this medium. If it continues along this vein you'll soon be running it on everything from your PC to your mobile phone to your PDA. You better brace yourself too. It's going to be huge.

*Borland's back*

Borland capped a busy October by capturing TogetherSoft, a firm that touts first rate development suites - making it a prime selection for Borland's increasingly powerful round table.

TogetherSoft, which has developed a respectable customer base over the years, will cost around $185m in cash and stock. This will bolster Borland's presence quite considerably when you throw in the earlier acquisition of Starbase. Development centres, new sales staff - it all adds up to a grand force.

Borland is after the technology from TogetherSoft. Its core product is the 'Together ControlCenter' which is probably best defined as a model-driven development suite as opposed to a model-driven application development environment (ADE). The difference being that the latter will be based on some form of 4GL or similar language, while ControlCenter is based on model-based code generation.

Earlier in the year, TogetherSoft went out on the acquisition trail itself snapping up WebGain - another member of the competition - with its WebGain Studio ADE. At the time of this acquisition it was rumoured Borland had been gunning for WebGain itself only to be pipped to the post by TogetherSoft. Now that circle is complete.

This pair, in fact all three of them, had already been working together as part of the Eclipse project anyway. Eclipse is an initiative aimed at offering a platform through which multiple tools can be integrated to create a best of breed application development environment. Best of breed meaning that a customer can pick and choose from any number of Eclipse compliant vendors, including Borland, IBM, Merant, QNX Software Systems, Rational Software, Red Hat, SuSE, TogetherSoft, and WebGain. Presumably Borland feels there is strength to be gained from pulling some of these relationships closer.

Borland paid $24m for Starbase only a few weeks ago. Again it's a development environment software vendor, specialising in requirements management, version control, collaboration, and defection detection, and it's a nice fit with Borland's products, aims and objectives. Right now Borland is looking positively formidable.

*QXL in the black*

One time stock market darling, internet auctioneer QXL is heading for profitability. The company has established quite a presence in Europe and is now set to reap the returns, surging into the black.

The news was delivered along with QXL's second quarter results which showed considerable promise. The number of transactions taking place across its European network of sites increased through the second quarter by 76 per cent. This high level of growth was as much to do with expansion as anything else. Gross profit for the second quarter rose 16 per cent, compared to the same period last year, to £1.33m.

The acquisitions did obviously add to operating expense but QXL has embarked recently on a drive to cut costs. With this in mind, and before exceptional expenses, operating expenses came down by 44 per cent to £4.1m. The overall trading loss decreased by 56 per cent to only £2.7m. QXL also launched its new fixed price and classifieds section.

QXL still has a six month operating loss of more than £10m to contend with. It does expect its localised sites to turn a profit by the end of the year but the company as a whole will not do the same, not yet anyway. Having been through a period of rapid expansion, QXL now seems to be focusing on controlling costs and says it plans to look at everything from technology costs to staffing levels to bring costs down further.

Auctioneering online seems to very much depend on understanding localisation issues and that could be where QXL has the edge over eBay. It's steadily expanded itself into new European countries through acquisitions like Aucland.fr, a leading French online auction house and partnerships with Yahoo! in Scandinavia - where QXL provides the portal giant's auction service in the region.

It's a strategy that appears to be working. It's certainly come a long way since its formation back in 1999 when Tim Jackson, the one-time FT journalist, spotted a rare opportunity in an emerging market.

Bloor Research is a leading independent analyst organisation in Europe. You can find out more at http://www.bloor-research.com or by emailing mail@bloor-research.com.