Microsoft to buy Firefly
By Maria Seminerio, ZDNN, and Jim Kerstetter, PC Week Online
April 7, 1998 4:07 PM PDT
Microsoft Corp. (MSFT) is in the final stages of negotiations to acquire
Internet personalization specialist Firefly Network Inc., sources said.
The deal is expected to be announced within the next week, sources close to
the situation said. Sources did not know the specific terms of the deal or
the fate of Firefly's approximately 70 employees, should the acquisition go
Firefly officials in Cambridge, Mass., would say only that they do not
comment on rumors. Microsoft officials in Redmond, Wash., could not be
reached for comment.
Firefly makes a suite of products based on Passport, a client electronic
identification tag that allows users to specify their interests and
information they would like to receive. With that data, Firefly's
server-side software can customize Web site data for that particular user.
Firefly was one of the first companies to deliver on personalization
technologies for Web sites and has been a key proponent of Internet privacy
But in recent months, criticism of the Web pioneer has grown as it became
clear that, outside of a few marquis customers, Firefly has received more
attention than business.
"Firefly came out with a flying head start over all its rivals," said Peter
Krasilovsky, an analyst with Arlen Communications, in Bethesda, Md. It
quickly gained 1 million users for its free client software, but then
squandered its lead by failing to provide a neat integration with existing
brands, Krasilovsky said.
Firefly, he added, fills a Microsoft need.
"Microsoft has always said they've had hundreds of people working on
personalization tools, but somehow it never really came together for them,"
Krasilovsky said. Taking over Firefly would "gel beautifully" with the
company's strategy, he added.
Sources indicated that Microsoft is not interested in Firefly's products as
much as its core technologies, which allow a server to generate personalized
information on the fly, protect consumer privacy and more readily share
information between Web sites.
The technologies provide two fundamental features: user profiling, which
serves up data for individual users, and collaborative filtering, which
allows for the sharing of data.
Should the deal go through, Microsoft would likely integrate the Passports
with Internet Explorer, while the server-side technology would likely be
integrated with Microsoft's Site Server and Site Server Commerce Edition
software, sources said. Microsoft can also use Firefly's profiling tools to
promote its own products on its Web site.
Firefly has played an integral role in two standards initiatives. The first,
the Open Profiling Standard, is designed to specify and automate user
privacy on a Web site. It is now under consideration by the World Wide Web
The second, the Information and Content Exchange specification, defines how
companies can seamlessly tie together information from their Web sites. It
is still in draft stage.
Firefly has pulled together more than $20 million in venture capital and
several high-profile customers such as BarnesandNoble.com Inc. After that,
however, the profile of Firefly's stable of two dozen customers drops.
While Microsoft could certainly develop Web personalization and privacy
tools such as Firefly's on its own, buying Firefly gives it instant access
to a solution that's already proved popular, said Tim Sloane, an analyst at
Aberdeen Group, in Boston.
The takeover would make sense, Sloane said, because "in general, that market
needs the stamp of a large vendor to move forward."
Firefly was founded by alumni of the MIT Media Lab and originally called
Agents Inc. It was renamed Firefly Network nearly two years ago.
Joseph Reagle Jr. W3C: http://www.w3.org/People/Reagle/
Policy Analyst Personal: http://web.mit.edu/reagle/www/
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