PARC Licenses Search System, Aims to Upstage Google

Xerox's (NYSE: XRX) legendary Palo Alto Research Center (PARC) said Friday it would license Internet search technology to Powerset, a relatively young startup that aims to build a better search engine than Google (Nasdaq: GOOG).

PARC holds an almost sacred place in technology lore, with claims to some of the most important inventions of the digital era, including Ethernet, laser printing and the graphic user interface now commonplace in personal computing.

The research center, which Xerox founded in 1970 and spun off to stand alone in 2002, will license natural language technology to Powerset in exchange for an undisclosed amount of "research funding," ongoing royalties and an unspecified equity stake in the startup.

Next-Generation Search

In addition to licensing technology and patents to Powerset, PARC agreed to work with the company to refine the technology through a long-term collaboration agreement.

The two entities say they can dramatically improve on current search engine results with technology that recognizes what a user is looking for based on the specific search words and phrasing.

"Today's popular search engines are limited in terms of functionality and interaction with the user," said PARC President Mark Bernstein. "The challenge to process and understand natural language has required many years to address, as technology has evolved to enable new capabilities."

Translating to Search

PARC's natural language technology -- which enables computers to understand plain-language expressions instead of having to work with keywords or preprogrammed commands -- is considered among the best in the world by search mavens.

The question remains, however, how well and how quickly that technology can be converted into a consumer-facing search engine.

Powerset said its cofounders -- Barney Pell, Steve Newcomb and Lorenzo Thione -- have been working with PARC since 2005 to explore and develop a market opportunity that could employ translating natural language in Internet search.

"Our collaboration with PARC results in remarkable new search capabilities that will turn the current statistical search model on its head," said Pell.

As part of the deal , PARC researcher Ron Kaplan will join Powerset as chief technology officer. Pell called Kaplan "an esteemed voice within the computational linguistics community."

Though they did not release specific go-to-market plans, the two parties hinted the technology was close to ready.

"The time is right to tell the world about the game-changing technology we've created," Kaplan said.

Cofounder Newcomb said the deal with PARC is major milestone for Powerset. "Now that it's complete, Powerset has a unique breakthrough natural language technology, a partnership with a world-class research organization and a competitive position that we will leverage within the search industry and beyond," he said.

Gearing Up

Last fall, Powerset announced it had raised US$12.5 million in its first round of financing from venture capital firms and individual investors.

The firm also released the names of some of its earlier backers, including the Founders Fund, a VC firm led by PayPal founder Peter Thiel; former ICANN (Internet Corporation for Assigned Names and Numbers) Chairman Esther Dyson; Facebook founder Sean Parker; and Answers.com CEO Eric Tilenius. Several former Google employers are also on the list of angel investors.

Any challenge to Google's search supremacy will likely take years to materialize, Sterling Market Intelligence principal analyst Greg Sterling, told the E-Commerce Times.

Even then, "it has to be significantly better than what exists now," he added. "If it's only marginally or imperceptibly better, forget it."

For example, the problem with Microsoft's (Nasdaq: MSFT) Internet search engine is that it is not that much different from Google, he noted.

Meanwhile, for PARC the Powerset partnership may be an attempt to avoid past mistakes. For example, commercial products that use underlying PARC technology have been successful even though PARC was not compensated.

Plenty of others have made similar claims to improving search results and search engine usability over the years. One relatively new search engine, hakia, has promised that its search tool, now in beta form, will improve search relevancy through "meaning-based" searches that take cues from the phrasing of queries, for instance.

Also, Google is known to be working on improving the way its search engine can handle phrases and questions, in order to give users more specific results.