October 20, 1997 7:30 PM PDT

Inktomi lines up alliances

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Search engine company Inktomi appears to be on a roll with today's licensing deal with Microsoft to build search capabilities into the software giant's online service, Microsoft Network.

The deal comes less than two weeks after Inktomi inked a strategic alliance with Intel. It called for Intel to make a minority investment in Inktomi and for the two companies to collaborate on Inktomi's network cache product, dubbed Traffic Server.

In addition, the search software company is expected next Monday to launch Traffic Server and unveil a sales strategy for the product that includes big-name technology companies such as Sun Microsystems.

"It's absolutely the fastest, most scalable cache for the network," said Inktomi chief executive David Peterschmidt, the former chief operating officer of Sybase who joined as CEO of the San Mateo, California, firm in the summer of 1996.

For Internet service providers and backbone providers, caching can reduce connect times and, in turn, their costs, Inktomi said.

Landing three of high-tech's biggest fishes as partners--Microsoft, Intel, and Sun--is a big accomplishment for a privately held company that is less than two years old with a name many people don't know how to pronounce, many analysts say.

"This Microsoft deal is great for them," said Andrea Williams, industry analyst for Volpe Brown Whelan. "It guarantees their existence." She cautioned, however, that the Net search field is crowded, and the company's odds of a successful initial public offering--possibly in the cards down the road--is still a long shot because of intense competition.

For those who don't know, Inktomi (pronounced "INK-to-me") is derived from a Lakota Indian legend about a spider character known for his ability to defeat larger characters through wit and cunning.

That seems fitting, given the cutthroat nature of the Net search engine business, where Yahoo, AltaVista, Excite, Lycos, and Infoseek, among others, are duking it out for market share and revenues. In the caching market, Inktomi could face competition from much bigger players, including Cisco Systems.

However, Inktomi thinks it has an edge on potential competitors, either in the search or caching business, because of its technology. In a nutshell, it depends on parallel processing and clustered computing that the company says is scalable to meet the growing demands of the Internet.

A group of University of California at Berkeley computer scientists, including Inktomi cofounder Eric Brewer, developed the software applications used by the company, initially with funding from the Advanced Research Projects Agency in Washington, D.C. Brewer and coresearcher Paul Gauthier founded Inktomi in February 1996.

"The underlying technology is very, very powerful at an opportune time in the industry," according to Peterschmidt.

The content of the Web stands at least at some 100 million pages, he said. But that could explode to more than 800 million by the year 2000, some analysts note. "You can see the need for massive scalability; that's what Inktomi is all about," Peterschmidt added.

Inktomi signed up its first licensee last year when it struck a deal with Wired Ventures to launch the HotBot search engine in May 1996. Also last year, it teamed up with Australia-based OzEmail to offer a search engine in Australia and New Zealand, as well as with telecommunications giant NTT to provide a search engine in Japan. Expanding its global reach, the company announced a partnership this summer with Universo Online of Brazil for a search engine in South America.

Besides Intel, the company received an $8 million equity investment by venture capital firm Oak Investment. Peterschmidt isn't ruling out the possibility of going public, but he remains coy about any possible date. "When we think the company is ready, we would pursue a public offering."

 

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