June 1997, Volume 14, No. 6 AI industry shake-out shifts into high gear

Let's take a look at the current crop of acquisitions and mergers, with the full realization that a month from now there may be even more of the same to report.


L&H acquires Kurzweil
In terms of name recognition, this month's biggest news story involves two speech recognition vendors. One of the grand old names in the AI field — Kurzweil, as in entrepreneur Ray Kurzweil and his eponymous company, Kurzweil Applied Intelligence (Waltham, Mass.; http://www.kurzweil.com) — has been acquired by Belgium-based Lernout & Hauspie Speech Products (http://www.lhs.com), for $53 million.

Both companies develop technologies and products that allow PCs and other devices to recognize spoken words and convert them into text or automatically perform operations. Lernout & Hauspie (L&H) will combine its efforts with those of Kurzweil AI to develop a large vocabulary, speaker-independent, continuous dictation engine. L&H believes the combined efforts will help accelerate its introduction of continuous speech dictation products by approximately six months.

Ray Kurzweil, founder of Kurzweil Al, was heralded in the early 1980s as a whiz-kid entrepreneur, and the press happily reported Kurzweil's boast of developing a voice-activated typewriter that could recognize 10,000 words. That particular product never materialized, saddling Kurzweil AI with a vaporware reputation that it eventually overcame by concentrating on speech recognition products aimed specifically at the medical reporting field. Its VoiceMED and Kurzweil Clinical Reporter products are now used in more than 500 healthcare institutions throughout the U.S.

The company introduced its Kurzweil Voice product in 1993, which restored a great deal of faith in its ability to produce mainstream speech recognition software. However, Kurzweil AI spun almost out of control the following year, in 1994, when shareholders filed a class action lawsuit alleging false and misleading statements in the company's prospectus and public financial statements, leading to most of its top management staff resigning (though Ray Kurzweil himself remained). Eventually, everything got sorted out and settled, and the company has concentrated on updating and evolving its products.

L&H plans to retain Kurzweil AI's R&D staff, and anticipates staff and cost reductions in both companies only in areas where there is redundancy. Since both companies develop speech recognition software, there is likely to be quite a bit of redundancy.


Kasparov has the last laugh
When Garry Kasparov, the reigning chess grandmaster, lost to IBM's Deep Blue computer, the mainstream press had a field day trumpeting, "Computer Beats Man!" As it turns out, Kasparov had a masterstroke of his own left to play: a Russian virtual reality company he helped found — ParaGraph International (http://www.paragraph.com) — has been sold to graphics workstation supplier Silicon Graphics (Mountain View, Calif.; http://www.sgi.com) for an undisclosed amount believed to be in the $50 million neighborhood.

Kasparov, along with a group of Russian scientists, co-founded ParaGraph to develop interactive VR tools for the Web. Silicon Graphics plans to spin out a new company, called Cosmo Software, which will focus on interactive 3-D Internet software running on multiple computer systems. ParaGraph, which has a U.S. office in Campbell, Calif., will become part of Cosmo Software, with the mission of developing Web-based multimedia content and applications.

Cosmo Software will combine the two companies' product lines, which include free 3-D browsers and revenue-generating products ranging from authoring tools to Cosmo server products.

Looks like Kasparov knew a little bit more about computing than he was letting on.


Verity strikes 64k gold
Verity Inc. (Sunnyvale, Calif.; http://www.verity.com), a provider of intelligent agent-based search and retrieval solutions for the enterprise and the Internet, has acquired 64k Inc. (San Jose, Calif.; http://www.64k.com), a small company founded in 1996 by former IBM database management researchers, for $3.5 million. 64k has focused on developing technology to improve the speed and effectiveness of relational database searches. 64k will now operate under the Verity name and will become a new Database Applications Group within Verity's R&D organization.

Verity plans to introduce by early 1998 a relational database search product, DBGuide, which will enable users to search and navigate large relational databases from a Web browser. In addition, Verity plans to integrate 64k technology directly into its Search'97 platform, allowing a unified approach to searching relational and textual data and significant increase in Search'97's structured search performance.

64k's core technology is the 64k Search Engine, which provides DBMS indexing, searching and clustering and summarizing results. In addition, it features similarity searching, which allows users to locate records which are similar to but not exact matches of the target.

DBGuide will be designed as a stand-alone product that provides efficient searches of relational databases published on an intranet, extranet or the Internet. DBGuide will be server-based and will sit between a Web server and an ODBC-compliant database (Oracle, Sybase, Informix, Microsoft, etc.). DBGuide will use the 64k Search Engine to perform searches, thus helping large number of users to search relational databases without overwhelming the underlying database system. The product will include a Web gateway that can directly publish the database on the web, together with an API that can be used to embed the product within existing Web-database applications.

Verity plans to integrate 64k technology into the Search'97 platform to allow users to seamlessly search textual (unstructured) and relational (structured) data. This will be achieved by tightly integrating the 64k Search Engine with the core Search'97 product — Information Server. The 64k Search Engine will be designed to enhance the existing field-search technology within the Verity Indexing Engine, and 64k database gateways will be designed to allow the Search'97 platform to search relational databases.


Excalibur picks up Interpix
Excalibur Technologies Corp. (Vienna, Va.; http://www.excalib.com), a provider of neural network and knowledge retrieval solutions, has acquired Interpix Software Corp. (Santa Clara, Calif.; http://www.interpix.com), the developer of ISpi technology, a multimedia robot-gathering technology for the Internet. ISpi enables collecting, managing, indexing and presenting multimedia data on the Internet and corporate intranets. Interpix is now a wholly owned subsidiary of Excalibur Technologies.

The acquisition was made to enhance Excalibur's search and retrieval capabilities, showcased in its RetrievalWare family of products (which features text and visual retrieval capabilities). The addition of Interpix supports the company's strategy to provide a unified architecture for knowledge retrieval capabilities encompassing all digital data repositories in the corporate intranet and Internet marketplace.

With Interpix, activities such as Web-crawling, indexing information in both the text and image domains, profiling Web information, and generating Web views of information based on knowledge retrieval indexing will be enhanced to benefit RetrievalWare and Visual RetrievalWare users.

Previously, Excalibur had worked with Interpix to create a product called WebSynchro, which is part of the RetrievalWare family. WebSynchro, which utilizes ISpi technology, allows organizations to maintain up-to-date indexes of their intranets, as well as any portion of the Web, and to scan incoming documents for subjects of interest to specific users.


i2 sets its eye on Optimax
i2 Technologies Inc. (Irving, Tex.; http://www.i2.com), a provider of intelligent planning and optimization software for global supply chain management, has acquired Optimax Systems Corp. (Cambridge, Mass.; http://www.optimax.com), a developer of genetic algorithm-based solutions. The transaction is valued at $52 million.

i2's Rhythm family of supply chain optimization solutions employ an open, object-based architecture, which allows ease-of-integration with complementary solutions. Optimax is the developer of OptiFlex, a suite of scheduling and sequencing tools for supply chain management.

The i2 and Optimax development teams will begin working to embed genetic algorithms from the OptiFlex solution within Rhythm. The new solution will optimize performance by balancing scheduling issues and overall business goals.


Mitek enhances its image with TSI
Mitek Systems Inc. (San Diego, Calif.; http://www.miteksys.com), a supplier of neural network-based solutions, has acquired all of the assets of Technology Solutions Inc. (TSI) (Chantilly, Va.), a provider of imaging software. TSI has two major products in form and fax processing markets, as well as a line of low- to mid-volume remittance processing solutions. TSI has installed these solutions at a number of Fortune 500 customer sites.

Mitek intends to provide end-to-end image-based business solutions to the end user and large systems integrators. Mitek's products incorporate neural network software technology for the recognition and conversion of hand-printed and machine-generated characters into digital data.


Fulcrum gathers up CRL's clusters
Sometimes it makes more sense to simply acquire a technology or a product rather than the entire company. For instance, Fulcrum Technologies Inc. (Ottawa, Ont., Canada; http://www.fulcrum.com), a provider of software solutions that turn enterprise information into knowledge, has purchased the advanced clustering technology developed by Central Research Laboratories Ltd. (CRL) (Middlesex, U.K.; http://www.crl.co.uk), a commercial R&D organization which was formerly the corporate research arm of THORN EMI. CRL's clustering technology has been used in conjunction with Fulcrum software in projects for the military intelligence communities and the European Space Agency. Fulcrum will pay $1.1 million to acquire this technology.

"Clustering" refers to the ability of software to analyze and automatically categorize documents based on their content and in relation to other documents in a collection. The acquisition will allow Fulcrum to deliver products in the first half of 1998 that leverage CRL's neural network technology for concept extraction to automatically classify and categorize documents relative to other information and to automate filing and organization of information according to content.

The CRL technology is also expected to be used to enhance the already advanced features of the recently launched Fulcrum Knowledge Network, such as automatic document summarization and the personalized and custom views into an organization's information — the Knowledge Map.

As a corporate R&D firm, CRL has developed such applications as neural networks in data mining, and advances in 3-D image and sound projection for use in virtual reality applications.


GKIS spends cool million on Data Crystal
GK Intelligent Systems (GKIS) (Houston, Tex.; http://www.gkis.com), a developer of intelligent agent technologies, has acquired Data Crystal, an intelligent data mining software suite developed by the Information Sciences Institute of the University of Southern California, for $1 million. GKIS will integrate Data Crystal within its Smart Agent product, an intelligent agent software suite providing communication and support services, secure navigation, retrieval and integration of information contained in network databases on the Internet and intranets.

Data Crystal applies advanced data mining technologies to discover useful patterns and trends from very large data sets. It uses a general mechanism called "metapatterns" to integrate deductive database techniques, inductive data analysis tools and human intuition into a continuous discovery loop that is both interactive and autonomous.

Data Crystal has been applied successfully in several real-world applications, including discovering common-sense regularities from a large knowledge base, finding circuit patterns from a telecommunications database, building prediction models from a chemical research database, and constructing fault detection rules from a semiconductor manufacturing control database.

By utilizing Data Crystal, companies that subscribe to GKIS's Global Environmental Technology Network will be able to quickly retain and analyze all data available through the network and apply it to the resolution of their environmental problems.