PointCast Comes Full Circle With idealab Sale

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May 11, 1999 (4:22 PM EDT)

PointCast Comes Full Circle With idealab Sale

By Malcolm Maclachlan,

Industry watchers have pronounced push technology dead for months and Tuesday idealab figured out where to bury the body.

The venture-capital firm spent $7 million to buy PointCast, which is best known for its client software that pushed news and information to users' desktops, downloading while subscribers performed other tasks.

Under idealab, this capability will instead be incorporated into LaunchPad, a San Diego company that makes the eWallet. This is software that lets people store credit card numbers and other information securely on their computers, to simplify online shopping.

PointCast's push technology will be used to send information to eWallet users. For instance, it can notify them when they have placed a winning bid for an auction item.

"The company was reduced to a file format,"
-- Ron Rappaport
Zona Research

"The company was reduced to a file format," said analyst Ron Rappaport of the Zona Research.

With the deal, PointCast has come full circle, from one of the hottest companies in the Internet space to a minor piece in someone else's e-commerce puzzle. The company debuted in 1992. In 1997, the company turned down a reported $450 million takeover bid by News Corp. Last July, it scrapped plans for an IPO. If the company had managed to go out at the proposed $10 a share, founder Chris Hassett would have netted $15 million, and then CEO Dave Dorman would have gotten $20 million.

"You can always re-file," Dorman said at the time.

PointCast caught on early to many of the concepts that are driving the Web portal business today: content aggregation, personalization, and specialized offerings for different businesses and geographical areas. In March of last year, it launched a set of industry-specific channels targeted at areas such as health care and government. In December, it introduced versions of the service targeted toward audiences in Germany and the United Kingdom.

However, the service gained a reputation as a corporate bandwidth killer. Upgrades in the software fixed many of these problems, but the service was still banned from many corporate networks. Its information-heavy streams were also too much for many home users.

The service did not offer a very efficient way to reach larger numbers of users, Zona's Rappaport said. Those users want a very personalized experience, and this is hard to do with streams of information.

"It wasn't just content that needed to be pushed," Rappaport said. "It was content relevant to individuals that needed to be pushed through a fatter pipe."

Indeed, some of the companies that are doing the best right now are those that concentrated primarily on the pipe, he said. AtHome, for example, first brought faster connections into homes via cable modems, and only later made a big content push with its merger with Excite, announced in January. AtHome president Tom Jermoluk said in March that the company expects to pass 1 million subscribers this year.

PointCast's new corporate parent has also been doing well. One of its companies, GoTo.com was clocked by MediaMetrix as the fastest-growing search engine of the first half of the year. Another idealab company, FreePC, made a splash in February by offering free, advertiser-supported computers to 10,000 "demographically correct" consumers.