Microsoft Buys a Piece of RealNames' Action

Despite the 1998 debut of technology that lets anyone use keywords to search the Web, most people still have to type in "www" addresses. RealNames Corp., the company that offers Internet keywords, is hoping that a 20 percent investment from Microsoft Corp. will help make the technology ubiquitous.

"The challenge is to be seen as credible," RealNames CEO Keith Teare said in an interview today from the PC Forum 2000 conference in Scottsdale, Ariz., where the announcement was made. "If Microsoft is also an equity partner in the company, it will not be the case in the future that Web sites will be known by their "www" addresses, but by their keywords."

Microsoft, now the largest stakeholder in RealNames, has been using the company's Internet keywords in its Microsoft Network search engine and its Internet Explorer browser, but will expand its use to older browser versions and to multiple keywords. For instance, now you can search for "Ford" on MSN, but soon you will also be able to search for "Ford Explorer" which will take you not just to the Ford site but to the pages that deal with the Explorer product.

"What this means is that this year, 130 million new PCs will ship with Internet keywords already enabled in the browser," said Teare. "This gives us access to an audience that is far bigger than anyone else in the industry has got."

America Online offers its own keyword search. Microsoft has about 81 percent of the market share for browsers, according to recent studies, but Netscape uses AOL's keyword search technology in its browsers. The Neoplanet browser also uses RealNames technology. Microsoft also will work with RealNames to push its Internet keyword technology as a standard within the Internet Engineering Task Force, which is already working to develop a standard called the Common Name Resolution Protocol.

"We are very interested in helping RealNames promote this as an industry standard," says Deanna Sanford, lead product manager for MSN. The companies did not disclose terms of the deal. RealNames is in a quiet period after filing to raise as much as $80 million in an IPO in October. In filings the company made with the Securities and Exchange Commission in October, RealNames had about 14.8 million weighted shares outstanding as of June 1999, reportedly valued at $4.50 a share during the company's last round of funding.

Using those figures, Microsoft's 20 percent would be worth approximately $13.3 million. Domain name registry Network Solutions, which is being acquired by VeriSign, holds about a 10 percent stake in the company. Other investors are Michael Dell of Dell Computer and AltaVista. RealNames, based in San Carlos, Calif., posted a loss of about $11 million for the six months ending June 1999.

The company makes money from advertising and selling keywords to corporations.

Small companies pay $100 per keyword per year and large companies pay $100,000 to $300,000 per year for RealNames to track keyword use, and a penny to 20 cents each time the keyword is used.

Sites that use the RealNames technology include AltaVista, LookSmart, Disney's Go Network, Google, and RealNames' database has a total of between 1.5 million and 2 million keywords, half of which are in the U.S..

RealNames allows people in other countries to search in their own language, including double-byte character sets like Kanji in Japan.

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