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Inktomi Corp - Expansion

content network engine search

The firm focused on expansion after the IPO. In September of 1998, Inktomi purchased C2B Technologies, a producer of online shopping comparison software. The acquisition added a third product line to Inktomi's arsenal—Inktomi Shopping Engine—and marked the company's entrance in the growing e-commerce industry. Inktomi also secured lucrative customer contracts with high-speed ISP @Home Networks and Microsoft-owned MSN Network.

Furthering the growth of its new Shopping Engine, Inktomi purchased online merchandising software developer Impulse! Buy Network Inc. in April 1999. By this time, the Shopping Engine had been improved to allow consumers to research products, compare prices, and purchase items. It also powered sites like Go Network, CNET, Snap, and Time Inc.'s New Media. At the same time, Inktomi also created its Directory Engine, which enabled portals like Yahoo! to create and maintain Web directories.

By 1999, with revenues of $71.2 million, Inktomi emerged as the leading search technology provider. A September 1999 BusinessWeek Online article attributed the firm's success to Peterschmidt's foresight. "Search companies like Excite and Lycos decided to mimic Yahoo and become Web directories and, ultimately, gateways to the Web. But rather than turn Inktomi into yet another Yahoo copycat, Peter-schmidt positioned it as a behind-the-scenes provider of essential technology that all of the major Web sites needed. By not competing with its potential customers, the company has avoided conflicts, enabling it to sell its products to the fiercest of rivals, like Yahoo and AOL."

While its search engine segment thrived—by August of 1999, the Inktomi Search Engine powered over 50 portals and destination sites—the company's Traffic Server business accounted for the largest portion of revenue, securing $40.3 million in 1999. As a result, the firm continued to focus heavily on that division. In September, Inktomi announced plans to purchase WebSpective Software Inc., a content distribution management firm. Upon completion of the deal, the company began offering the Inktomi Content Delivery Suite, the first integrated content delivery, distribution, and management solution package available in the industry.

Inktomi continued expansion efforts into the new millennium. It purchased FastForward Networks, an online streaming media provider, as well as Ultraseek Corp., a subsidiary of Internet portal GO.com. The company also teamed up with Adero Inc., a network services provider, and AOL to form Content Bridge, an alliance of technology-based firms working together to improve content delivery over the Internet. In 2000, revenues tripled for the third year in a row; network products accounted for nearly 70 percent of the total. The company operated in the black for the first time. By then, the firm's product line consisted of Content Networking Solutions, Inktomi Search Solutions, and Wireless Solutions, a new segment that included Inktomi Wireless Data Accelerator software that was designed to boost network capacity. As part of the firm's effort to focus on its Content Networking offerings, it sold the Inktomi Commerce engine to ecentives Inc. in March 2001.

While many firms in the information technology sector began feeling the effects of the economic slowdown and increased competition in the late 1990s, Inktomi remained virtually unscathed until 2001. In April of that year, the firm announced job cuts and stated in an E-Commerce Times article that "economic conditions in the United States and Europe have declined more quickly than we had initially anticipated, forcing us to take strong cost-cutting measures for the continued health of our business." Inktomi stock was trading at $5.45 in March, down from a 2000 high of nearly $240 per share.

Believing the Content Networking Solutions segment would continue to be a major growth area, Inktomi focused on research and development in that area. By offering both service providers and enterprises control over network content, Inktomi aimed to gain a strong foothold in the increasingly competitive e-business market. Despite weakening economic conditions, Inktomi was determined to remain a leader in providing Internet infrastructure solutions.

FURTHER READING:

Balderston, Jim. "Inktomi Revs Up Hotbot Web Search Engine." InfoWorld, May 20, 1996.

Eddy, Andy. "Inktomi: Show Me the Money." Network World, June 29, 1998.

Harbrecht, Douglas. "Inktomi Scours the Net for Profits." BusinessWeek Online, April 4, 2001. Available from www.businessweek.com.

"Inktomi Acquires WebSpective as Content Distribution Grows." Computergram International, September 17, 1999.

LaPolla, Stephanie. "Inktomi Traffic Servers Ease Web Jams." PC Week, April 28, 1997.

Macaluso, Nora. "Inktomi Falls on Warnings, Layoffs." E-Commerce Times, April 3, 2001. Available from www.ecommercetimes.com.

Moeller, Michael. "A Hidden Goldmine Called Inktomi." BusinessWeek Online, September 27, 1999. Available from www.businessweek.com.

Quinton, Brian. "Inktomi Buys Into E-Commerce." Telephony, September 21, 1998.

Uimonen, Terho. "Inktomi, Partners Launch Content Delivery Alliance." Network World, August 28, 2000.

Wang, Andy. "Inktomi Makes Impulse Buy." E-Commerce Times, April 23, 1999. Available from www.ecommercetimes.com.

Woods, Bob. "Competition Between Alta Vista, Yahoo Leads to Inktomi Corp. Deal." Computer Dealer News, June 8, 1998.

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