COMMERCIAL NEWS

San Diego, CALIF. — Michael Kanellos reports that a few years back, a band of search engine start-ups fought for dominance and millions in venture capital in the then wide-open market for Internet navigation and portals. If previous venture capital shindigs are any indication, the same thing will occur next year with distributed computing.

Distributed computing – software and services that allow companies to weave thousands of PCs into a virtual supercomputer – and its close relative peer-to-peer networking were the highlights at the Technologic Partners Technology Outlook conference in Burlingame, Calif. The annual two-day event is where start-up execs hawk their business plans to the old guard of venture capitalism.

Distributed computing executives such as Edward Hubbard, CEO of United Devices, which is working on a package based on the Seti@home software, delivered their pitches to packed rooms. By contrast, many attendees used a roundtable discussion on wireless e-commerce to check phone messages.

Distributed computing “is like search five years ago,” NextSet vice president of corporate computing Sam Perry said. Venture conferences aren’t nearly as glamorous as they might sound. Technology Outlook, for instance, took place at the Burlingame Ramada Inn, a traveler’s hotel that overlooks airport runways and a salt marsh. Every once in a while, someone emerges from a lunch-induced nap to ask, “So what’s the business model?”

Still, the event remains one of the premier venues for getting an early glimpse at what could become the next big thing. In years past, Netscape Communications and Marimba laid out their business plans at the conference while still in start-up mode. Then again, investors one year gave a standing ovation after a demonstration of a revolutionary operating system. The presenter was Jean Louis Gassee and the operating system was from Be.

Distributed computing appears to have legs, however. One of the founders of Entropia, a competitor to United, is Andrew Chien. He graduated from MIT at 16 and then obtained three PhDs there before becoming one of the first full professors in the University of California system, pointed out Entropia CEO James Madsen. Another employee managed a project that led to the discovery of the largest prime number ever found.

The appeal of distributed computing largely comes from speed and efficiency. Approximately 90 percent of desktop computing cycles isn’t used, according to various estimates. By funneling those toward a common goal, large corporations can run complex simulations that ordinarily would require a mainframe. Time gets compressed as well, because calculations can occur simultaneously, rather than in sequence.

“If you aggregate the power at the edge of the network, it is far more powerful than the servers at the center,” said Madsen.

Although the ultimate adoption of the technology appears inevitable, which companies ultimately prevail is an open question. Part of the problem comes from the relative youth of the market. United, for instance, was founded on Dec. 6, 1999, making it one of the older companies in the market. So far, it has 57 employees and issued a first beta version of its software in October.

Another large question mark is which customers will adopt it. Both Entropia and United will initially target biotechnology companies and application service providers that rent software over the Web. Biotechs will use the technology to compress the time required to run drug simulations, while ASPs will hire these companies to bombard their networks in stress tests. Exodus has already signed a seven-figure deal with United.

By contrast, DataSynapse will specifically target financial institutions and banks. These customers not only need the additional computing power, said DataSynapse CEO Peter Lee, they are more willing to spend on computing.

Security is also a major concern. With distributed computing, companies will effectively be exporting data to anonymous desktops outside the corporate firewall, noted Larry Smarr, formerly director of the National Center for Supercomputing Applications. “You’ve got someone’s code on 100,00 machines,” he said.

The companies will also likely fall victim to the copycat phenomenon. Although each can brag of different technologies and capabilities, the technology behind each is functionally equal in many respects, many said, which could lead to rapid consolidation.

In the end, the size of the client network – how many desktops become part of the distributed network – will be a major determining factor in survival. To attract clients, companies are offering sweepstakes prizes, cash payments and other incentives. But nobody has come up with a “magical combination,” noted David Anderson, chief technology officer of United.

“The technology (from all the companies) is very similar. What is going to make a difference in the end is who has the most clients,” said Will Holmes, CEO of Porivo Technologies. “This is definitely going to become a commodity market.”

============================================================