Silicon Valley-Israeli firm can deliver e-mail in a flash

JERUSALEM — Almost everyone has experienced it. The critical message that came too late, never arrived, or was overlooked in a crowded e-mail inbox. For some, the delay was crucial to their jobs, their business or their personal lives.

Enter companies like the 6-year-old BackWeb Technologies, which hope to turn the e-mail practice of "send-and-pray" into a transmission even more reliable than the telephone.

"Most companies call us the Internet FedEx," explains BackWeb CEO Eli Barkat and co-founder. "Use us when you want something guaranteed to get there and you want to know who got it."

Headquartered in San Jose as well as Ramat Gan, Israel, BackWeb went public in 1999 and is traded on the NASDAQ market. Barkat, 37, who led paratroopers as a lieutenant in the Israel Defense Force, was a founding partner of BRM.

BackWeb's delivery service flashes on the designated recipient's desktop to alert him/her of an important incoming message. If the recipient doesn't respond, BackWeb jumps the message to another communications device like the cell phone or PDA, such as the Palm Pilot. If all efforts fail, the sender is informed that the delivery was not a success.

Major companies like Compaq, Hewlett-Packard and British Telecom currently use BackWeb technology to streamline in-house communication, but when the technology was launched in 1995, it was a little before its time.

Back then, says Barkat, push didn't work as a mass-market technology because the right content and proper infrastructure just weren't there. So the company focused on more mature market niches, starting with sales forces, evolving into call centers and finally into channel marketing.

Ericsson, for example, licensed BackWeb's push infrastructure to deliver product information to its retail outlets after discovering that text messages sent to overflowing mailboxes were not being understood or even read.

With BackWeb's Polite push technology, Ericsson can now send a video message out to its retailers that will flash on their desktops to let them know it's there. And because BackWeb's infrastructure is two-way, the technology then lets the global cellular giant know the message was received and read.

The retailers can also tailor the information they receive by indicating to Ericsson which products and lines they are interested in selling.

The bottom line is that the push technology is good for a business and even gives it an edge.

At Nortel Networks, top management uses BackWeb to send out important videotaped messages to the global staff, then checks to ensure every employee has actually watched. Given BackWeb's escalation technology that bounces critical messages from one communication medium to the next, acceptable excuses would be hard to find.

BackWeb server software can also be useful for e-commerce as a way to push relevant catalogues or discounts to interested customers, actively bringing business to their sites instead of waiting for it to come to them.

Despite the obvious advantages of BackWeb, which charges its e-commerce companies royalties per transaction — and corporate intranet providers an average of $400,000 for installing the technology — the company has been hard hit by the current Wall Street crisis.

Company shares have dropped from a peak of $59.2 last April to $3.50 last week, and recently BackWeb announced that fourth quarter results would fall some $6 million short of the expected revenues after deals stalled midway, spurring Robertson Stephens to cut the company's rating from Buy to Long Term Attractive.

"In the new IT [Internet Technology] spending environment we believe that companies will continue to make do with existing and unconnected delivery solutions such as e-mail and voicemail for some time."

On a brighter note, Robertson Stephens pointed out that BackWeb also landed its largest-ever deal in the last quarter — $9.2 million with SAP –and that none of the deals that failed to go through were lost to a competitor, reflecting the absence of any real threat to the company in the market place.

BackWeb's most vigorous competitors are relative newcomers to push technology such as Vignette and Tibco, and they all provide push as a feature in an overall package, not as a total infrastructure, says Barkat.

With his eye set on making BackWeb a de facto standard in all e-business solutions, Barkat plans to work this year on launching partnerships with global infrastructure leaders.

The death of the dot-coms, which led to the doomsday-like atmosphere that foiled many of BackWeb's expected deals this past quarter, has also shown why such companies need push technology to succeed.

Dot-coms failed, Barkat says, by trying to work with traditional pull technology that waited until surfers chose to come to a site to look for what they wanted and when they didn't find it, they left.

"If you were Amazon, what you would do with BackWeb is that, now that you know what kinds of books people want to get, you have them subscribe to your BackWeb service, and when there is something meaningful, you send it down to them and get them back to buy it."