Yahoo has decided to ditch its fee-based instant messaging service for business users, acknowledging that the development of this type of offering lies beyond its core strength as a provider of consumer-oriented Internet services.

Yahoo will instead focus on its free instant messaging service, which is aimed at consumers, and rely on partners to make it palatable for business users. These partners include vendors that specialize in so-called gateway software that lets IT departments manage their companies' instant messaging platforms.

"We have reorganized our instant messaging business to optimize our ability to leverage the Yahoo network, whether our customers are at work or at home. By offering an instant messaging product that is based on a single platform, we are even better prepared to address market needs by offering features based on segmented needs," a spokeswoman for the company said, reading from a prepared statement.

Yahoo Business Messenger was a hosted service accessed via instant messaging software from Yahoo loaded on users' PCs. It offered features that many companies want and need for instant messaging, including message encryption, IT management and administration tools, message logging and archiving, voice and video communications and online meetings.

Regarding support for existing Business Messenger users, a Yahoo spokeswoman wrote in an e-mail: "We are committed to our customers and we will work with them to provide the best solution to meet their business instant messaging needs. Through relationships with companies, like Akonix (Systems), we are working with our customers to provide IT administrator functionality for the use of Yahoo Messenger in the business environment. This is an ongoing process, and there is no specific 'shut-off' date (for the Business Messenger service)."

The spokeswoman declined to disclose how many Business Messenger users the company has.

The news of Business Messenger's demise came as no surprise to Genelle Hung, an analyst at The Radicati Group Inc. "I had been hearing through the grapevine for a while that they were losing customers, and there has been a lot of speculation about its future," she said.

Companies see little value in paying Yahoo for its managed service when they can get a broader functionality from vendors of instant-messaging gateway products, she said. "The business model for the product wasn't very feasible," she said.

Gateway makers include Akonix, FaceTime Communications and IMlogic. These vendors' software is installed at a corporate server and allows IT departments to manage the use of instant messaging services, such as the ones from Yahoo, America Online and Microsoft, within their companies.