Jim Phillips acts like a man with eyes in the back of his head. And for good reason. His company, Internet Pictures Corp., aims to be the eyes of the Internet--by creating the kind of three-dimensional, you-are-there views of the world that engineers have been trying for years to achieve.

Phillips needs virtual eyes in the back of his head, too, to see his way through the Web business sandstorm. Rivals come out of nowhere fast, vying to become the Kodak of the digital age. Ipix, as his company is known, is embroiled in patent lawsuits with digital-imaging rivals. Competitors have rallied people to post anti-Ipix banners across the Web, protesting the company's aggressive business tactics.

Soon, though, I expect to hear competitors and customers of this little company from Tennessee saying, "I've been Ipixed."

Ipix, you see, is the name of the company's imaging technology. More than 10,000 travel, real estate and news sites already use it to create surround-scenery. Eventually Hollywood may adapt the nascent Ipix movie format to spawn a new genre of 3-D entertainment. It's only a matter of time, I believe, before millions of people will be using Ipix-fitted digital cameras to take 3-D pictures of their family events and e-mail them to friends.

If you travel in cyberspace, you've probably been Ipixed. Maybe you logged on to MSN HomeAdvisor and saw virtual home tours. Click on the image of the master bedroom at Whoopi Goldberg's Connecticut farmhouse, for example, and you feel as if you are standing inside her room. Clicking at the right edge of the picture moves your viewpoint right, so you can look out the bedroom window. Clicking in the middle moves you straight toward her closet, where a sign over the door says: "Men's Underwear."

These 360-degree pictures create the illusion of depth, making you feel you are inside the image. There are competing 3-D image formats, such as Apple's QuickTime, but most are more time-consuming to produce. Also, most others are not spherical--they don't let you see up and down as well as right and left.

News sites have used Ipix to let people see around Times Square on New Year's Eve and experience the inside of NASA spacecraft. Ticketmaster Online gives people Ipix views from stadium and concert seats.

"I really believe this may be the killer application for content on the Internet," says John S. Hendricks, chief executive of Discovery Communications Inc. of Bethesda, an investor in Ipix. "We see it as the enabling technology to allow people to have their own personal adventure around the world. We can take them places they may never be able to visit personally."

Discovery Online has created many virtual adventures with Ipix still photographs. Soon it will become among the first to adopt the new immersive Ipix movie format, which lets people twirl all around inside a moving picture and see the action behind as well as in front of the camera. "We want to take people virtually there by creating what we call V-there adventures," Hendricks said. "You will be able to walk down a street in Cairo and click on a spot to see a delayed tape that our digital capture team has recorded. There will be live video, too--perhaps from a street corner in Hong Kong."

Using a fish-eye lens screwed into a digital camera, Ipix users take back-to-back still photos of any scene. They stand in the same spot, snap, turn around, then snap again. Special software stitches the two 180-degree images into a 360-degree view which can be published on the Internet or seen on a computer. The movie format uses a more elaborate contraption that melds two fish-eye views into one camera.

"This is going to shake up the photo industry," says Phillips, the Ipix chief executive and founder of Skytel Communications Inc. He came from Motorola Inc., where he ran its multimedia division. When he arrived at Ipix in 1997, the company had 18 employees and no business plan.

In a classic Internet tale, Ipix rose to become the Web's virtual-reality kingpin by dint of shrewd partnerships and marketing moves, inventing a business model as it went. It sold equity to Motorola, Discovery, Media One Group and other strategic partners, putting their executives on the board. It partnered with camera makers such as Nikon and Olympus to develop fish-eye attachments for popular digital cameras and distribute the Ipix software. Last summer it sold stock to the public. The price soon doubled, giving it the currency to buy competitor Bamboo.com this month.

After inking deals with many Web portal sites, the company last week signed the big kahuna, America Online. Soon, AOL's 20 million subscribers will be able to take virtual Ipix tours of Las Vegas and other cities. AOL will embed the Ipix viewing software into its next-generation platform and promote Ipix tours as part of AOL content offerings for people with high-speed Internet access.

Critics still abound. They are sore that Ipix threatened to sue a German engineer to prevent him from displaying tips for converting Ipix pictures into other 3-D formats on the Web. Some critics believe Ipix's patents are too broad, potentially stifling development of alternative imaging tools.

Even stickier are Ipix usage fees. Trying to create a future revenue model as strong as Kodak's for film processing, Ipix charges users for each image they save, with fees going higher for images posted online. Fees for commercial use range from $15 per image up to hundreds of dollars. For personal consumer use, they are $1 per image.

Critics note that unlike Kodak, Ipix doesn't do anything after selling the software that develops the image. They say the company is trying to be like a music jukebox, collecting money every time anyone hears a song played on its software "machine."

"I use Microsoft Word, but I don't have to pay Microsoft every time I print a document I wrote with their software," Wayne Harrison of Pinecam VR Studio wrote in an e-mail exchange.

Still unknown, of course, is whether immersive pictures are the next big thing in photography or just another gimmick, like those 3-D glasses handed out to moviegoers in the 1950s. Do we really want to wander around inside pictures?

I spent hours clicking on 3-D tours online, trying to find out. Even with a cable-modem connection, it was too slow to be much fun. I peered out at the Woodstock audience from where Alanis Morissette stood on stage, then twirled around a Beijing street, zooming in on harried faces.

Finally, it was clicking through the rubble of flattened homes in Kosovo that got to me. I felt a surge of interest in the scene. Not taken there, but close enough to make me think Ipix will be opening our eyes to a whole new way of seeing online.

Send tips and feedback to Leslie Walker at walkerl@washpost.com.