Thoughts on Microsoft Buying Fast Search & Transfer
January 8, 2008
To start the New Year, Microsoft bought Fast Search & Transfer for about $1.2 billion, a premium over Fast’s share price before the stock was delisted from the Oslo exchange on January 7.
I’ve tracked Fast for more than seven years, including a stint performing an independent verification and validation of the firm’s technology for the U.S. Federal government. Some good background links:
- Useful overview of Fast’s history
- Another good overview
- Summary of some of the issues facing the company
Most of the coverage of the acquisition focuses on the general view that Microsoft will integrate Fast’s search technology into SharePoint. With upwards of 65 million installations of SharePoint, Microsoft’s content management and search platform, Fast’s technology looks like a slam dunk for Microsoft.
I want to look at three aspects of this deal that may be sidelights to the general news coverage. The thread running through new stories appearing early January 8, 2008, hit three points. One, Microsoft gets enterprise search technology that can add some muscle to the present search technology available in Microsoft Office SharePoint Server (MOSS). Second, shareholders get a big payday, including the institutional shareholders hit hard by Fast’s unpredictable financial results and flatlined share price. Third, synergies in research, technology, and customers make the deal a win for Microsoft and Fast.
Now, let’s look at the sidelights. I think that one or two of these issues will become more important if the deal closes in the second quarter of 2008 and the Fast technology is embraced by Microsoft’s various product groups. None of these issues is intended to be positive or negative. My goal is to discuss “behind the firewall search” or what the trade press calls “enterprise search”. This is distinct from Web search which indexes content on publicly-accessible Web servers in most cases. The “behind the firewall” type of search indexes content on a company’s own servers and its employees computers. The idea is that the “behind the firewall search” tackles the wide range of information and file types found in an organization. To illustrate: an organization must index standard file types like Word documents and Adobe Portable Document Format files. But the system must be able to handle information stored in enterprise applications built on SAP technology or with IBM’s technology. There’s another twist to “behind the firewall search”. That’s security. Certain information cannot be available to anyone but a select and carefully vetted group of users. One example is employee salary information. Another is research data for a new product. Finally, “behind the firewall search” has to be able to generate useful results when there aren’t indicators like the number of times a document is clicked on or viewed. As you may know, Google’s Web search system uses these cues to determine relevancy. In an organization, a very important piece of information may have zero or very low accesses. In a patent matter, a “behind the firewall search” system must be able to pinpoint that particular piece of information because it may be the difference between a successful legal resolution and a costly misstep.
Web Roots
Fast Search & Transfer’s technology has deep roots in Web indexing. Fast pulled out of Web indexing for the most part in 2003. In 2003, Fast sold its Web search division to Overture, subsequently acquired by Yahoo. With its focus on enterprise search, Fast’s engineers crafted enterprise functions on the high-speed, Linux-based indexing system that powers AlltheWeb.com. Fast’s Web roots have been wrapped in three types of extensions. First, Fast wrote new code to make integration with other enterprise systems easier. Second, Fast used some open source software as a way to perform certain tasks such as data management. Third, Fast acquired technology such as the 2004 acquisition of Nextpage Publishing Applications business Unit from Nextpage and a number of other properties, including the Convera RetrievalWare business. Convera was a “behind the firewall” search vendor that had fallen into the quagmire that sucks cash in an attempt to make search systems work the way licensees want. The point is that today’s Fast search system is complicated. There are quite a few subsystems “glued” to other components. It’s the nature of information to make today’s solution a smaller piece of what customers want. Over time, “behind the firewall search” systems become hugely complex. The figure below, taken from a 2005 Fast Search presentation once available via the Google cache, provides a good indication of what makes a Fast system tick. Click on the thumbnail to view it at normal size:
Staffing
Fast Search has some outstanding engineers. Not only is John Lervik (CEO) a Google-caliber technologist, Bjorn Laukli (chief technical officer at one time) is a search wizard. Fast Search’s management team has turned to sales and marketing professionals. One of these individuals — Ali Riaz, now CEO of Attivio, Inc. — burnished the Fast Search image and fueled sales. In the wake of Mr. Riaz’s departure, Fast Search had to trim some costs. More than 140 employees were terminated and at the same time in 2006 and 2007, Fast Search expanded its technical hiring. The company handled the shift from pure technology in the pre-Riaz era to a sales-driven organization when Mr. Riaz was at the helm from 2000 to 2006, and then back to a more engineering focus in the post-Riaz era. Not surprisingly, institutional investor pressure increased. The Fast Search Board of Directors looked for ways to get the company on an equal revenue and earnings footing with arch-rival Autonomy plc. Arguably, Autonomy’s acquisitions (Verity in search and Zantaz in email mail compliance services) have been more beneficial to Autonomy’s revenue growth than Fast Search’s acquisitions such as Platefood in advertising and Agent Arts, a content recommending system. In short, there’s been some contention between sales and engineering, institutional investors and the board of directors, and the board of directors and senior management. Joseph Krivickas’ joining the firm as President and Chief Operating Officer in July 2007 marked a turning point for Fast Search, culminating in the Microsoft deal.
Customers
My Washington, DC affiliate (BurkeHarrod LLC) involved me in a study of satisfaction with “behind the firewall search” systems in the last half of 2007. The data revealed that in our sample of US scientists and engineers, 62 percent of the respondents to the statistically-valid survey were dissatisfied with their existing “behind the firewall search” systems. My examination of the publicly-available customers of Autonomy, Endeca, and Fast Search revealed an overlap of about 50 percent among Fortune 1000 firms. The significant overlap is not surprising because large organizations have units with different search requirements. Incumbent systems are not eliminated, creating a situation where the typical large organization has five or more “behind the firewall search” systems up and running. Autonomy’s acquisition of Verity and Fast Search’s acquisition of Convera was about customers. Granted each acquired company brought new technical capabilities to their respective buyers. The real asset was the customer base. I learned when researching the first three editions of The Enterprise Search Report that customers are usually in “search procurement mode”. No single system is right for the information access requirements of a large organization.
New Direction?
One final issue warrants a brief comment. In the last five years, there’s been a shift in information access methods. In the early 2000s, key word search was the basic way to find information in an organization. Today users want their information retrieval systems to suggest where to look, offer point-and-click interfaces somewhat similar to Yahoo’s so a user can see at a glance what’s available, and systems that make it easy to pinpoint certain types of information needed to perform routine work tasks. Key word search systems have to bulk up with additional technology to deliver these types of information retrieval functions. The challenge, not surprisingly, is cost. With ever cheaper processors and storage, performing additional indexing and content processing tasks seems trivial. Rich text processing or metatagging adds complexity to already sophisticated systems. The market wants features that can be expensive and problematic to implement. Perhaps this is why investors are keen to fund next-generation search systems that go beyond key word search into linguistic, semantic, and intelligent systems. For the company that can deliver the right mix of functionality at the right price a financial windfall awaits. In the meantime, there’s the general dissatisfaction and churn that is evident in the present consolidation in the search sector.
Beyond Search Net-Net
These sidelights may be outside the mainstream of those tracking the information access industry. My view may be summarized in four observations:
- First, Microsoft SharePoint is complex. The Fast Search enterprise search platform (ESP) is complex. Integrating two complex systems will be a challenge. Microsoft’s engineers and Fast Search’s engineers are up to this task. The question will be “How long will the meshing take?” If speedy, Microsoft can expand its service offering and put another hurdle in the path of companies like Google eager to win more of the Microsoft market. If slow, the delay will allow further incursions into Microsoft territory by Google as well as IBM, Oracle, and SAP, among others.
- Second, customers may be wary of escalating risk. Just as Autonomy had to reassure Verity search system users after that buy out, Microsoft will have to keep Fast Search’s more than 2,000 customers in the fold. The loss of some key accounts as a result of the deal will consume additional sales and marketing resources, thus adding to the cost of the acquisition. Companies like Autonomy and Endeca will be quick to make an attempt to win some of Fast Search’s more lucrative accounts such as its deal with Reed Elsevier for the SCIRUS service. Upstarts like Exalead, ISYS Search Software, Siderean, and others will also seek to provide a seamless replacement for the Fast Search solution. Other customers will be content to use an existing Fast Search system, worrying about changes when they occur. The search sector is about to get much more interesting and fast, pun intended.
- Third, investors react to the news of $1.2 billion changing hands in predictable ways. I look for more interest in companies in the search sector. I can also envision the acquisition of Autonomy by a larger firm. In fact, looking forward 12 months, I see a series of shifts in the search landscape. There will be more search interest by the superplatforms such as Google, IBM, Oracle, and other enterprise software vendors. These large firms will want to expand their share of the Fortune 1000 market and capture an increasing share of the small- and mid-sized market. Upstarts ranging from Paris-based Exalead to the almost-unknown Tesuji in Hungary. My list of “behind the firewall search” vendors numbers more than 50 companies, excluding specialist firms that offer specialized “snap ins” for content processing.
- Lastly, I think further consolidation in search will take place in 2008 and 2009. In the midst of these buy outs, customers will vote with their dollars to create some new winners in “behind the firewall” search. I will offer some thoughts on these in a future write up.
Comments
31 Responses to “Thoughts on Microsoft Buying Fast Search & Transfer”
-
- Subscribe to Beyond Search
Feature archive
News archive
-
While Enterprise Search is complex by design, users and business decsion makers, think it is simple (the google effect), and I do agree that the ES marketplace is about to get much more interesting and fast (pun intended 😉 and who knows there may be more “up-starts” in the bag than you’ve listed above.. Time will tell who and when will win this most interesting competition! “May you live in interesting times” – http://en.wikipedia.org/wiki/May_you_live_in_interesting_times
John T. Kane
Search Evangelist, IntelliSearch
Stephen, here’s my “rest of the story” take:
http://intelligententerprise.com/blog/archives/2008/01/buying_fast_mic.html
[…] is what it is. I have commented on the long slog this acquisition represents elsewhere. An early January 2008 post provides a glimpse of the complexity that is ESP (that’s enterprise search platform, not […]
[…] Thoughts on Microsoft Buying Fast Search & Transfer : Beyond Search http://arnoldit.com/wordpress/2008/01/08/thoughts-on-microsoft-buying-fast/ […]
Thank you so much, usefull +1
I had to ask my wife who Miley Cyrus was. I’m not sure I understand her role in search and content processing. I am delighted you find some of the information of interest. Please, remember that I often write about really old topics; for example, Microsoft’s architecture in 1999.
Stephen Arnold, August 1, 2008
Thanks! Really interesting. I wish i could spend my time on writing articles…just have no time for it.
Yes, great job. 🙂 Interesting indeed.
Hi, Anna,
Ah, a positive comment. You are paddling against the current, but I appreciate your time and good words.
Stephen Arnold, August 4, 2008
Etiketer,
You may want to look at the disclaimer for this Web log. I don’t write original material for this Web log. I am recycling old information and putting snippets in the Web log that will not be in my new for fee studies. With regard to your wish to have time to write, maybe you should look for short cuts similar to mine. Failing that, you may want to keep in mind that in the consulting biz, setting priorities defines [a] the person’s discipline and [b] the person’s values. Ergo: no writing, writing is not valuable or the discipline intrudes on other priorities.
Stephen Arnold, August 4, 2008
Hi people!
The interesting name of a site – arnoldit.com
I at night 7 hours
sat in the Internet So I have found your site 🙂
The interesting site but does not suffice several sections!
However this section is very necessary!
Best wishes for you!
Forgive I is drunk :))
@Preadorkpooma That qualifies as blog comment of the year.
Andreas Ringdal
Okay, I think you like a passage in a long essay written a long time ago.
Stephen Arnold, October 19, 2008 from London
Preadorkpooma
I don’t have a Google drunk filter so you will have to do your best to communicate when you are in whatever condition you are. Think of your liver!
Stephen Arnold, October 19, 2008
Hello,
My Name is, Charles
some crazy threads
this is my site:
http://R7B8bBg3.spaces.live.com/
I very much love summer 🙂
Someone very much loves winter 🙁
I Wish to know whom more 🙂
For what you love winter?
For what you love summer? Let’s argue 🙂
Hello! Our company plans creation of essentially new search system!
We spend interrogations 3 months.
It is important to us to know what search system from existing
now on the Internet most to you it is pleasant
google or
msn or
yahoo
And also that it is pleasant to you and that is not pleasant
in these search systems.
Very usefull post, i think i will use it.
Thanks.
Hello
As a fresh arnoldit.com user i just want to say hello to everyone else who uses this bbs 🙂
Porno BEST!! http:sex-porevo.com
I’ve found arnoldit.com by using Google
hi all from uk
Hi there!
Trailpie,
Yep, the Google indexes arnoldit. Glad you you could master the intricacies of the search box.
Stephen Arnold, January 30, 2009
???????? ? ???????? ?? ?????? ??????.
?? ??????: ??? ?? ??? ??????, ????, ???????, ???????, ??????????? ??? ??????????? ??????????, ??? ??.
?? ? ?????????? ?? ???? ?????? ????? ????????? ????? ???????, ? ??????? ???? ????? ?????? ???????.
?? ?????? ??????, ??? ??? ??????? ?????? ?? ??????????, ?? ??? ?????????? ??????? ? ??????.
?????? ?? ??? ???????, ? ?? ??? ??? ????? ?????? ????? ? ???? ???? ? ????????? ???????? ??????,
???? ?? ??????? ?????? ?? ????? http://zamuz-blog.freehostia.com – ?????? ????? ??? ????? ?? ????????????? ? 2 ?????????. ???? ?? ??????,
?????? ?? ???????. ? ??????? ?????????, ????? ?????? ?????? ? ???????
????? ?????? ???????? ?? ????????? ?? ???? ????? ?. ?????
????? ?????? “????????” ???, ??? ?????? ??????????? ? ???????? ???????? ?? ?? ??????? ??????????? ?????? ???????? ?????????????????? ?????? ?.?. ?????.
?????????????? ?? ?????? ??????, ? ????-?? “?????” ?????????? ??????? ?????? “?????????” ??? ?????, ??????? ???????? ???????? ? ????????????? ???? ????????? ??????????.
???????? “????????” ? ?????????? ??????? – ??? ????????, ??????? ??????? ???????? ?? ?????. ????? ???? ??????????? “?????? ???????” ? ???????? ???????????? ??? ????????????? ????????????, ????????????? ????????? ?????, ? ????, ???? ??????????? ???.
????? ??????? ?????????? ?????? ????????? 1 ????? ??????????-????????? ????? ? 9 ?????????? ?? ????????? ????????????? ???? ?????????? ??????? ?? ???????? ?????????? ????????????? ??????? ?.?. ???????.
? ??? ??? ? ?? ?????, ????? ????????? ??? ?????? ???????? ?????????????????? ??????? ? ??????????? ???? ?????????? ???????? ?????? ? ???????? ???????. ? ??? ????? ??????? ????????? ? ??????????? ????? “? ???????” – ?? ?????? 11 ????? ?????? ????????? ?????? 25 ? 35, ?? ????????? ??????? ????? ?????????????????? ?????? ????? ????? ????????? ?????????-????????????? ???????????? ???????????.
?????, ?? ?????????? ???????????? ???????????????? ??????? ?????????????????? ?????? ?? ??????????. ? ?? ??????? ???????????? ? ????????????? ??????????.
????? ????, ??? ?????????? ????????? ?? ? ?????????? ???????? ??????????, ? ????? ? ???????? ? ?????????? ???????????? ????????????????
Osobo,
Do me a favor and run the Russian text through http://translate.google.com. Post that output, please. WordPress is funky with certain character sets.
Stephen Arnold, February 18, 2009
how to remove fishing hook wisconsin catfishing
Film online 😉
???? ? ???? ????????????, ? ???? ??? ??? ?????? ????????? ?? ???? ????????, ??? ?????-???? ? ???? ?????. ???? ????? ? ????????? – ???????? ???????????? ???????, ???????????? ?????? ? ?????? ???? ????????? ? ???? ?????? ???????????? ????. ???? ‘Bingo Day’ ?????????? ??? ???????????, ??? ??????? ????? ? ???????????? ???????????? ???? ? ????? ? ?????. ????????????? ???????????, ??????? ????????, ?????????? ???????, ??????????? ?????????? ?????, ???????? ????? ?????? ? ??? ? ?????????? ??????? ??????????? – ???????????? ???????????? ???? ? ????. ????????? ?? “Bingo Day”.
[…] Search guru Stephen Arnold: Thoughts on Microsoft Buying Fast Search & Transfer […]
Dave Kellogg,
I am not guru. I am a goose-ru.
Stephen E Arnold, September 24, 2010
thanx for excellent content