Microsoft, RealNames to develop Net keyword standard

As expected, the software giant announced it will take a 20 percent stake in software maker RealNames and will push for new standards to simplify Web navigation.

RealNames, which substitutes short "keywords" for complicated Internet addresses, or URLs, already offers its service through Microsoft's Internet Explorer Web browser and MSN Web portal. Microsoft announced the inclusion of RealNames in its Web browser software last year in a series of initiatives to jump-start its stalled MSN Internet effort.

RealNames' service is an Internet equivalent to America Online's popular keyword system, part of its proprietary online service. The system allows AOL members to type a common phrase to find specific content channels.

Forrester Research analyst Josh Walker said MSN?s stake in RealNames could represent a huge opportunity. As more mainstream consumers jump onto the Web, making the search experience easier would be one way to keep new subscribers. In fact, simplicity is exactly how AOL has appealed to new Internet users, Walker added.

"I think they've shown that can be successful within their community," Walker said in reference to AOL. "And I think that's likely what Microsoft is trying to emulate here."

Microsoft's endorsement of RealNames may up the ante in its ongoing battle with AOL regarding Web standards. The companies sparred last summer over compatibility between their competing instant messaging software products.

RealNames' concept is an add-on to search engines and directories and an easy way of moving from point to point on the Internet, the company has said.

In a previous interview, RealNames chief technology officer Nico Popp said the company wants "to eliminate the URL from the user experience." Using keywords, a Web surfer can type "Ford Explorer" in place of "http://www.fordvehicles.com/vehiclehome.asp" to visit Ford Motor's online showroom, for example.

In addition to the investment in San Carlos, Calif.-based RealNames, Microsoft will begin working with the Internet Engineering Task Force (IETF) to develop an Internet keywords standard.

The IETF already has formed a working group devoted to devising a "common name resolution protocol," or a standard way of implementing Web keywords.

"We think (RealNames) is a great solution that works across the entire Internet, and it's not a proprietary system," said Deanna Sanford, a Microsoft spokeswoman. "It's a good approach to work with the IETF for any new Internet technology."

The investment from Microsoft comes a month after RealNames warned users that its customer database had been hacked, and that user credit card numbers and passwords may have been accessed.

A person can register and pay for keywords on RealNames' Web site via credit card by filling out a form that includes personal information, such as his or her name, mailing address and email address. RealNames then stores that information in a database, just like an e-commerce company or domain name registrar would with a customer making an online purchase.

Some major firms have taken a fancy to RealNames' system. eBay, for example, has hundreds of the company's keywords for individual pages within its site.

But despite relationships with prominent companies, RealNames has faced hurdles in making its keyword system widely available to individual Web users. In hopes of getting its keywords to work wherever people get on the Web, RealNames in October said it would give away the software that lets developers of Web browsers, Web sites and computer operating systems plug into its keyword database.

RealNames filed in October to raise up to $80.5 million in an initial public offering.

News.com's Paul Festa contributed to this report.