New Web-based Technology Draws Applications, Investors

New Web-based Technology Draws Applications, Investors

By MYLENE MANGALINDAN and REBECCA BUCKMAN Staff Reporters of THE WALL STREET JOURNAL November 3, 2005; Page B1

Justin Grate, a U.S. soldier stationed in Iraq since January, missed sending instant messages over the Internet to his family and friends. The military bars downloading software for the major instant-messaging services to computers that he and other soldiers share, mainly because these programs eat up too much bandwidth.

Then Spc. Grate discovered Meebo Inc. The company uses a hot new, Web-based technology called Ajax to let anyone with an Internet connection send instant messages via major services, including those run by Time Warner Inc.'s America Online Inc., Yahoo Inc. or Microsoft Corp., without needing to download the messaging software to their PCs.

The setup makes it possible for users of shared computers in Internet cafes, military camps, schools or elsewhere to access their personal lists of contacts and send instant messages, without compromising their privacy. Spc. Grate says he can now communicate instantly from Iraq with friends and family in his hometown of Greenfield, Ohio. "Meebo works like a charm," wrote the 24-year-old in an email.

Meebo is one of a bevy of innovative start-ups tapping into Ajax, a set of programming technologies that is the buzz of Silicon Valley. Ajax, which stands for "Asynchronous JavaScript and XML," helps make Web-based programs nearly as responsive as software that resides on a user's computer. The technique helps speed up computer operations by cutting down on the need to request fresh Web pages from a distant server computer. Instead, Ajax applications can request smaller chunks of data to update a Web page already on a user's screen.

As a result, Internet-based programs viewed inside Web browsers, such as instant messaging or email, can now behave more like bulkier software that resides on a desktop computer. Some of these Internet-based programs can also be cheaper to buy than desktop software, posing a potential threat to the likes of Microsoft's ubiquitous Office word-processing suite. Microsoft, however, notes that desktop products like Office have successfully weathered many technological challenges over the years.

Ajax technology is gaining more notice because it now powers cutting-edge services like Google Inc.'s Google Maps. The popular online-map service lets people call up a specific location on a map and then seamlessly move their computer cursor all around it, bringing new, nearby locations into focus immediately. One could conceivably drag a cursor across a Google map from, say, Fifth Avenue in Manhattan all the way west into the farmland of New Jersey, without ever having to pause or reload the information on the screen.

Ajax-type technologies were first developed by Microsoft in the late 1990s as part of its Internet Explorer Web browser to improve its Internet applications. In 1998, Microsoft released the Web version of its Outlook email product, which technically is an Ajax application and which the company says is now used by about 80 million people. But the name "Ajax" wasn't coined until earlier this year, by Jesse James Garrett of the San Francisco Web consulting firm Adaptive Path. He came up with the pseudo-acronym in the shower while searching for a shorthand way to explain to clients why the recent offerings by Google can perform so robustly.

On Tuesday, Microsoft announced new software services that will use Ajax and pledged its further support of the technology.

Meantime, several new companies have emerged to specialize in Ajax, with names like Zimbra Inc., Joyent, Kiko, TrimPath and Upstartle. And Silicon Valley venture capitalists -- flush with cash and anxious to fund the next big thing -- are putting money into the start-ups.

Zimbra's chief executive, Satish Dhamaraj, says that when he started his company in December 2003, "I really thought that Ajax was just a bathroom cleaner." Now his San Mateo, Calif., business has amassed $16 million in funding from venture-capital firms including Accel Partners, Redpoint Ventures and Benchmark Capital, the firm that famously funded eBay Inc. Peter Fenton, an Accel partner, says Ajax "has the chance to change the face of how we look at Web applications" and could boost technology spending by corporations, because Ajax is also being used to develop software for big companies, not just for consumers.

Meebo, the instant-messaging company, has raised $100,000 in funding from a few "angel" investors since its launch Sept. 14, says Seth Sternberg, chief executive of the Palo Alto, Calif., company. Several venture-capital firms have approached the three-person start-up, which is still figuring out its business model. But Meebo is reluctant to grow too quickly, as some companies did in the dot-com bubble, Mr. Sternberg says.

Joyent Inc., of San Anselmo, Calif., focuses on offering Web-based email, calendars, contacts and file-sharing services to small teams of people -- say, the employees of a dentist's office, or a small department in a big corporation. Joyent co-founder David Young says the company was built for a "couple hundred thousand dollars, and is basically cash-flow positive."

Now Joyent is talking to venture capitalists about raising extra money, and "we're not having any trouble getting meetings," Mr. Young says.

Zimbra's Mr. Dhamaraj says there is a "venture capital frenzy" over Ajax, and "I think [venture-capital firms] should be careful about that." Though Ajax has the potential to make some desktop applications irrelevant, Mr. Dhamaraj doesn't believe Ajax will completely change the rules of computing.

Other technology veterans are rolling their eyes over the Ajax frenzy. Ajax "makes our site more useful to our users, but it won't support 100 new public companies," says Rob Solomon, Yahoo's vice president of shopping. A similar investing craze erupted a few years ago over "social networking" start-ups such as Friendster, sites that allow people to meet and connect with new friends online. Stand-alone social-networking companies haven't wound up being that successful, though the technology has been integrated as a feature into many e-commerce and content sites.

Some compare the excitement over Ajax to that of HTML, or hypertext markup language, a software language that was used to create the first Web pages and still is in use today. Ajax lets programmers reduce the cost and time to build programs, says Bret Taylor, a Google project manager. "There's increased pressure for Web applications to act like desktop applications," something that Ajax enables, he says. Zimbra CEO Mr. Dhamaraj adds that Ajax-powered applications are often more secure than desktop applications, because individual Web pages aren't actually downloaded and stored on a computer -- making them less vulnerable to viruses or email spam attacks.

Big, established companies like Yahoo are using Ajax to simplify their applications, making them easier for users. Through its acquisition of email start-up Oddpost last year, Yahoo is revamping its email program so users can drag and drop emails from one folder to the next and can scroll through messages, instead of clicking on an email and moving between Web pages. Microsoft, Salesforce.com Inc., Amazon.com Inc. and others also are implementing the technology to improve their sites.

Google's Mr. Taylor says Ajax may help companies produce more compelling applications, prompting consumers to spend more time at a site. One example: the DVD-rental site Netflix Inc. shows a pop-up window with a movie synopsis when Internet users move their cursor over a movie title. Previously, Netflix users had to click to another Web page to see that synopsis.

"All of the sudden, I'm interacting more with that site and am a happy customer as a result," Mr. Taylor says.

Write to Mylene Mangalindan at mylene.mangalindan@wsj.com¹ and Rebecca Buckman at rebecca.buckman@wsj.com²

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