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Ideas, Internet, Inktomi
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October 15, 1998: 8:14 p.m. ET
Inktomi's CEO discusses search engine technology and the Internet's future
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NEW YORK (CNNfn) - Inktomi provides a complex technology that serves as the architecture for Internet search engines. And in spite of a three month sell-off in the overall market, particularly in the technology sector, investors have been scooping up shares of this red hot company.
After going public at $18 in June, the stock [INKT] has more than quadrupled in value, closing Thursday at 84-3/16, up 5/16 on the day.
CNNfn's John Defterios spoke with Inktomi's CEO, David Peterschmidt. The following is a transcript:
DEFTERIOS: I'd like to put this in perspective, if we can. If you look at the technology behind your company, you are the brains that operate the search engines. What is so unique about your technology?
PETERSCHMIDT: Well, the technology is the outgrowth of three years of government-funded research at Berkeley. The challenge we face with the Internet is we're getting more and more documents and more and more users. And that takes tremendous computing power. And this basically is one of the most powerful software architectures we've ever brought into the technology sector. And that's what is so important about all of this. The search engine, then, is very fast and very robust because of this underlying core technology. And it's all done through software that makes it fast.
DEFTERIOS: I had a chance to read Michael Dertouzos' book about what will be in the future for the Internet.
PETERSCHMIDT: Sure.
DEFTERIOS: You get on and you log on now. It's a good service. It's not a great service yet.
PETERSCHMIDT: Right.
DEFTERIOS: How long before it really improves to be very efficient for the common user?
PETERSCHMIDT: Oh, I think we're already in the start of that generation now. You're going to see tremendous change in the next 18 months. In fact, I talked to people about the fact that our children today who think of TVs and PCs are going to be considered antiquated because they can talk about those in five years.
We're going to see broadband, just like cable, be the source of bringing us Internet. And we're going to punch a button and it's there rather than dial up. And that's coming very quickly.
DEFTERIOS: Do you think it's going to include the TV signal, high quality TV signal within three years?
PETERSCHMIDT: Well, there is some indication of that. I was just in Europe and they're already going to digital television now. And that puts broadband into the house. And you're going to have the signal come both ways. In fact, they're actually doing hyperlinks so that you can touch things on digital TV and get to Internet access. So that's definitely coming. In fact, Europe is doing the technology jump now.
DEFTERIOS: That's interesting. Intel has 90 percent share in its sector; Microsoft about 85 percent. What is your percentage of the market share for what you do in your segment of the market?
PETERSCHMIDT: Well, in the search engine, it looks like we're doing about 35 to 40 percent of all the searching transactions on the World Wide Web -- all powered by our technology.
DEFTERIOS: Does it worry you that the valuations are extremely high for the company? Because you're expected to post your first profit in the year 2000.
PETERSCHMIDT: Yes, I think that what the market is reflecting in our stock is that the Internet is clearly a huge gross sector. In fact, John Chambers at Cisco (CSCO) just said the same thing a couple of days ago. He's very bullish about what is going to happen.
And the market is reflecting on these companies that they see as the core companies to the Internet. This happens to be the enabling technology company. This company is going to provide a lot of that enabling technology that you just referred to -- will we make it a better medium and a faster medium for the users.
DEFTERIOS: Now you bought C2B, which is a specialist in retailing.
PETERSCHMIDT: That's right.
DEFTERIOS: The retailing part of the Internet -- it still has some flaws in it. People don't feel very secure, but you're working aggressively to improve it.
PETERSCHMIDT: Yes. C2B is actually about giving the consumer a better shopping experience in finding goods and services. And just like search, we're providing the underlying technology that the portals will be able to provide this service to their customers.
And what it really does is not only just security, but it's going to give all of us a lot more robust way to find goods and services and evaluate products and pricing right over the Internet and then purchase them.
DEFTERIOS: People that know you say that you're a visionary, you know what's next on the Internet. Give us an inkling what you think is the next huge trend for an investor to look out for.
PETERSCHMIDT: Well, I think here's what's coming next. And you've actually already hit on that -- and that's the shopping area. We've just seen Amazon.com (AMZN) buy a company that's all about shopping. We've seen a couple of the other portals buy shopping applications. So, the next move now is the development of commerce. We will see the Internet become a very viable, very quick method for buying goods and services. And I think that in the next 12 months you're going to be amazed at the quantum jumps that are made in that area. 
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Inktomi
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