A few months ago, when Acuity was forming plans to sell off iChat in favor of focusing on its customer-interaction software, EShare was scrambling to pick up Acuity's customers. EShare went so far as to issue a press release boasting about the large number of customers it picked up after Acuity's "drastic move to discontinue its iChat product," and EShare CEO Jim Tito claims that even before iChat's buyer Koz.com came into the picture, "[Acuity] referred lots of customers to us." Mark Saul, CEO of Acuity, denies this.

These discrepancies simply point to the stiff competition in what both companies see as the bigger Web-based, customer-interaction market, which has been largely created by astounding growth in e-commerce. As companies continue to do more and more business on the Web, customers are demanding better customer service.

"People are not going to stop interacting with people," says Mr. Saul. "The Web is going to bomb prices, but that won't change human nature."

Forrester Research projects the market for customer service software will reach $658 million in 2002. That seems like small potatoes relative to the $3.8 billion market Forrester expects the entire online commerce software market to grow to by 2002. However, in comparison to the $25 million Forrester thinks the customer service portion will be worth in 1998, it demonstrates the enormous growth potential in this market.

David Cooperstein, a senior analyst with Forrester, says that it's becoming apparent to companies on the Internet that there is a need to combine the offline and online customer support channels. "It is clear that is on everyone's agenda for 1999 and 2000," says Mr. Cooperstein.

TO CHAT OR NOT TO CHATEShare continues to believe in chat as a means to acquire customers that will eventually need its customer-support applications, and it thanks its lucky stars to be "the last one standing." Mr. Tito believes there are no "true competitors" left in the chat space.

"It's a beautiful thing," says Mr. Tito. "We stuck it out and now we have huge confidence on the customer side." Mr. Tito believes his company has acquired the very confidence Acuity sacrificed when it sold iChat.

But analysts think Acuity's business decision made sense and provided the company with a head start in the new market. "The customer service area has tremendous potential and to be a big player you need to shed the community background," says Paul Hagen, a Forrester analyst.

Mr. Cooperstein agrees. "EShare thinks that chat is a component of customer support," says the analyst. "I think it's a weak one."

Moreover, Mr. Saul contends that his company actually gained the confidence of its customer-interaction clients by focusing all its resources on these products and creating an application "unrivaled in our space."

"We really understand the call center space and have built confidence on that," says Mr. Saul. "[EShare] has built an add-on tool based on their chat platform."

MONEY FOR CHATTINGOn Tuesday EShare announced $6.5 million in funding from investors including Pequot Private Equity Funds, Penny Lane Advisors, and Walden Capital Partners. Previous investors Chase Capital and Flatiron Partners also contributed to the funding round.

EShare says it plans to use the money to grow into a dominant player and begin acquisitions some time in the next six months.

In addition, eShare sports impressive customers on both its chat and customer service sides. EShare's chat customers include Lycos (LCOS), Geocities (GCTY), Tripod and Starmedia and it has provided customer service software for clients including AT&T WorldNet, 1800Flowers and, mostly importantly, AOL (AOL).

And while both Mr. Hagen and Mr. Cooperstein believe that Acuity presently has a bigger market share than EShare, they claim that there are roughly fifteen players in this space and no one can tell who will dominate this market.

"This is a new market," says Mr. Hagen. "You'll see all kinds of companies flocking to it before it really shakes out."