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RealTime IT News

Critical Path Wants Your E-mail

Nothing happened Monday on the new Internet IPO front, but if one online calendar is right, the rest of this week shapes up as quite busy for 'Net ticker debuts.

Six Internet companies could begin selling shares this week, including autobytel.com, Autoweb.com, Critical Path, MiningCo.com, OneMain.com and priceline.com. (Don't count on priceline.com, though; the word we still hear is sometime next week for the "name your price" e-site company's IPO.)

The Midday report has profiled the two online auto middleman competitors mentioned above, along with priceline.com and national ISP network OneMain.com. Today we'll look at Critical Path, an e-mail outsourcing service for corporations, Web hosting companies and ISPs.

Critical Path, based in San Francisco, is targeting a huge market. E-mail is now accepted as a critical (hey, that's where they got the name!) form of communication in this country and most of the world. International Data Corp. predicts the 2.1 billion e-mail messages sent over the Internet per day last year will grow to nearly 8 billion messages by 2002.

Add increasingly bandwidth-intensive attachments, as well as the slow explosion of remote access demand for e-mail services, and it's clear that many Internet traffic managers (ISPs and Web hosts), large-volume sites such as portals and overwhelmed corporate IT departments might welcome outsourcing assistance now.

Indeed, a January report by research firm Jupiter Communications underscores the already existing problems with e-mail management. Jupiter's study found that 42 percent of the top Web sites fail to respond within five days - if at all -- to customer e-mail questions and requests, possibly forfeiting sales, customer loyalty and credibility. In some cases the sites were inaccessible via e-mail.

Enter companies like Critical Path, which promises customers reduced costs by handling the storage, management and security for their e-mail.

The company currently faces competition from several smaller players offering either e-mail management services or software. The real challenge will come from Microsoft and AOL, which is trying to leverage its purchase of Netscape to make inroads into corporate markets.

Critical Path began operations in October 1997, and the company says it has attracted about 180 customers, including online broker E*TRADE - its biggest account - and Web host Verio.

Revenues in 1998 were a mere $897,000 against a net loss of $11.5 million. Accumulated debt was $12.5 million through last year, much of which was expended on equipment to ensure scalability of service.

Microsoft has not yet targeted the e-mail services market, and AOL faces credibility questions in the corporate sector that will take time to overcome, its purchase of Netscape notwithstanding.

Which means Critical Path's best chance for success is to build a defensible market share now. To do so, however, it must ramp up at a faster rate than it has been. That means a push in sales and marketing, where the company had only 30 employees as of Jan. 15, according to its SEC filing.

Critical Path is expected to offer 4.5 million shares for $9 to $11 each. Nasdaq ticker symbol will be CPTH.