June 2, 1999 1:40 PM PDT
Web services start-ups map battle plans
After the basics of browsing were established, the first big thing for the Web was search technology, around which today's massive portals were built. Then it was Web-based email, which became a must-have for portal sites. Now chat and Web-based calendars are standard, making their providers rich in the process.
But the next wave of the Web gold rush may lie in refining traditional Web technologies, and a new crop of Web start-ups is doing just that.
These upstart companies are challenging established online players such as America Online and Inktomi. Despite the formidable size and marketing muscle of their established competitors, analysts paint a bright future for these niche players.
"The common belief that every market is overcrowded is a myth," said Allen Weiner, analyst at NetRatings. "We're about to enter a period of verticalization of the Web, with a proliferation of interest-specific content and e-commerce sites. Each is going to require the necessary tools and infrastructure to really be strong. There's no shortage of opportunities for good software companies to find targeted sites that are interested in them."
Search technology, long the bane of Web surfers weeding through tens of thousands of irrelevant search results, has attracted a number of this new wave of technologists and ventures.
Search technology provider Direct Hit, which debuted in August 1998, is doing brisk business with its so-called popularity engine, which ranks search results according to how many previous users clicked on results and how long they stayed there.
In addition to adding partners, Direct Hit also managed to take some business away from search technology leader Inktomi.
"There's such an acceptance of our technology in the marketplace that HotBot made us the default search engine in February," Culliss said. "That was the result of the great user feedback that they got on our service. They realized there was a huge demand for better search, and we displaced Inktomi."
Inktomi points out, however, that while HotBot now turns to Direct Hit for results on common search queries, more arcane queries still turn up Inktomi results.
"If you do a search for 'cars,' that is a Direct Hit search," said Inktomi spokesman Kevin Brown. "But if you search on 'infrastructure software,' then you'll get results powered by Inktomi."
Because more complicated and obscure searches make up the lion's share of queries, Brown added, Inktomi is still serving more than half the results on HotBot.
And Inktomi is not resting on its laurels. The company is busy readying its own popularity software and other "relevance-boosting" technologies, Brown said. The firm has implemented some of them already, but Brown declined to say which ones.
"What you should expect to see from Inktomi is not one option or another, but instead you're going to see us blend in a lot of different search technologies," Brown said.
Brown said most of the methods were not so complicated that Inktomi couldn't build them in-house, but he did not rule out possible acquisitions of more specialized challengers.
Two other partners will make Direct Hit the default in coming months, Culliss said. He declined to name them.
Direct Hit is moving in on another piece of Inktomi territory with a shopping engine, currently under development. To fund that project, the company has embarked on a third round of financing. The company is funded by venture capital firms Draper Fisher Jurvetson and Mosaic Venture Partners and plans an initial public offering later this year or in early 2000.
Another start-up working on improved search results is Google. Google's technology resembles citation analysis, which ranks the importance of documents by how many times they are cited. Google ranks search results based on how many sites link to them.
Google, founded last year by Stanford University computer science graduates Sergey Brin and Larry Page, is named for the word "googol," which means 10 to the 100th power.
Search is not the only area technologists have found to be worth revisiting, and this month will see the launch of at least two new chat-related products.
The first is the product of a Tel-Aviv start-up called HyperNix, which plans to launch an instant communications Web technology tentatively called "Gooey." The company is tight-lipped about its product, but one person familiar with it described it as a hybrid of chat and Web surfing technology.
The product is supposed to give visitors to a Web site a sense of who else is visiting that site, creating what HyperNix calls "Dynamic Roving Communities."
A second firm hoping to challenge the ICQs and IRCs of the world is a tiny start-up with no funding but a colorful idea: animated chat.
Lake Clear Software this month plans to launch a beta version of its instant messaging and chat software that offers users a library of animated characters they can use to represent themselves, specifying body type, hair and skin color, and other traits.
"It's an instant messaging system similar to AOL and ICQ, but the big feature is the animation," said Lake Clear founder Mark Zamoyta. "It's graphical, but it also has typical text-based chat. Characters can walk around, shake hands, kiss, whatever."
Not quite "whatever," though. Lake Clear plans to steer clear of one of instant messaging and chat's more prevalent uses by offering only fully clothed characters and barring sexually explicit uses of the technology to those who license its content creation tools.
"We're only going to allow rated-G or -PG animations," Zamoyta said.
Some established players are employing the Net business mantra: If you can't beat 'em, buy 'em. For example, Amazon recently bought Alexa Internet, which produces both a Web archive and a surfing guide that steers users to related Web sites.
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