Japan is one of the Internet's fastest-growing markets, with growth rates of 700 percent annually. It has an estimated 6.6 million online subscribers and is increasing at a rate of nearly 278,000 users per month.
The U.S. companies are trading on a tried-and-true business model: find a foreign partner to handle distribution and marketing, and then provide the technological know-how. The companies typically strike a revenue-sharing deal.
In Inktomi's case, the company has found a giant partner. NTT has revenue of more than $70 billion annually, and is one of the world's largest telephone companies. NTT Advertising, which specializes in computer networks, will handle the advertising.
Why expand abroad? For U.S. Internet and search engine companies, the American market is getting crowded. Foreign markets often are expanding faster than in the United States, and there is surging demand by consumers and advertisers for the Net.
There are several hurdles, however. Many foreign residents are leery whether the U.S. companies are familiar enough with their culture to organize information for research, entertainment, news, and shopping.
In addition, advertisers worry whether the Net add will be effective; the dollars spent on the Net market are miniscule compared with TV or print.
Still, the firms are undaunted. "We believe that this search engine, through the integration of technologies from Inktomi and NTT, will serve as a key piece of infrastructure for the Japanese Internet market," said Shigeru Ikeda, executive vice president of NTT's Multimedia business department.
Inktomi Chief Executive David Peterschmidt called NTT an ideal partner, because of its size, expertise, and market clout.
The company recently struck a deal to offer a version of its search engine in Australia. Inktomi now is looking to the European market and has been talking with some telcos, sources said.
Last week, Infoseek said it launched versions of its search and navigation services in French, German, Japanese, and Spanish. It also has established advertising sales partnerships throughout Europe and in Japan and Israel.