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A Turning Point in Search? Is the Microsoft-FAST Deal Significant?

The interest in the Microsoft purchase of Fast Search & Transfer is remarkable. What caught my attention was the macho nature of some of the news stories in my Yahoo! Alert this morning. I found these revelatory:

First, The January 9, 2008, story, “Microsoft Goes for Google Jugular with Search Buy“. The story is good, and it presents what I call an MBA analysis of the deal, albeit in about 900 words. From my point of view, the key point is in the last paragraph, which quotes Fast Search & Transfer’s John Lervik as saying: “We have simply not focused on (operational execution),” Lervik told ComputerWire last year. Had it focused a little more on execution, it might have gone on to become a gorilla in enterprise search. Instead, it has succumbed to acquisition by a company playing catch-up in the space.”

Second, the January 8, 2008, Information Week story by Paul McDougall. The title of this story is “Microsoft’s Fast Search Bid Puts Heat on Google, IBM”. The notion of “heat” is interesting, particularly in the behind-the-firewall market. The key point for me in this analysis is: “Microsoft plans to marry Fast’s enterprise technology with its SharePoint software — a suite of server and desktop products that give workers an interface through which they can retrieve information and collaborate with colleagues. It’s a combination that Google and IBM will have to match — and analysts say that’s sure to put Autonomy and Endeca in play.” The “heat”, I believe, refers to increased intensity among the identified vendors; that is, blue-chip companies such as Autonomy, Endeca, and IBM.

The third — and I want to keep this list manageable — is Bill Snyder’s January 8, 2008, story in InfoWorld (a publication that has been trying to make a transition from print money pit to online Web log revenue engine). This story sports the headline: “Microsoft Tries an End Run around Google“. The most interesting point in this analysis for me was this sentence: “Despite all of Microsoft’s efforts, the most recent tally of search market share by Hitwise, shows Google gaining share at Microsoft’s expense. Here are the numbers. Google’s share in December was 65.98%, up from 65.10% the previous month; while Microsoft’s share (including MSN search and Live.com) dropped to 7.04% from 7.09%.” The Web search share has zero to do with enterprise search share, but that seems to be of little significance. Indifference to the distinctions within the generalization about search is a characteristic of many discussions about information access. Search is search is search. Alas, there are many flavors of search. Fuzziness does little to advance the reader’s understanding of what’s really going on in the “”behind the firewall” search sector.

The Range of Opinion

These stories provide some texture to the $1.2 billion offer Microsoft made for Fast Search & Transfer. The “jugular” story underscores the growing awareness among some pundits and journalists that Microsoft has to “kill” Google. Acquisitions of complex technology with some management challenges added to spice up the marriage require some internal housekeeping. Once the union is complete, the couple can figure out how to cut another company’s jugular. Unfortunately, the headline tells us more about a perception that Microsoft has not been able to respond to Google. So, a big play is positioned as the single action that will change the “battle” between Google and Microsoft. I believe that there is no battle. Google is Googling along with its “controlled chaos” approach to many markets, not just enterprise search. In fact, Google seems almost indifferent to the so-called show downs in which it is engaged. Google went on holiday when the FCC bids were due, and the company seems somewhat unfocused with regard to its challenges to Microsoft if I read what its executives say correctly. The choice of the word “jugular”, therefore, suggests an attack. My view is that Microsoft wanted customers, a presence, engineers, and technology. If Microsoft goes for Google’s jugular, it will take some time before the knife hits Googzilla.

The second story reveals that consolidation is underway. I can’t disagree with this implication. Endeca’s initial public offering, once scheduled for 2007, failed to materialize. My sources tell me that Endeca continues to discuss partnerships, mergers, and other relationships to leverage the company “guided navigation” technology. You can see it in action on the U.K. newspaper The Guardian‘s Web site. My tally of companies in the search business now has more than 350 entries. I try to keep the list up to date, but with companies going out of business (Arikus, Entopia, WiseNut, and to name three I recall without consulting my online files), entering the business (ZoomItIn), repositioning (Brainware), hiding in perpetual stealth mode (PowerSet), and pretending that marketing is not necessary (Linguamatics), and other swirls and eddies. But, the metaphor “heat” is acceptable. My view is that the search sector is a very complex, blurry, and evolving Petri dish of technology in the much larger “information access space”. Investors will react to the “heat” metaphor because it connotes a big payday when a deal like Microsoft’s takes place.

The third story is interesting for two reasons. First, the author has the idea that Microsoft does not want to cut through Google. I thought of a Spartan phalanx marching relentlessly toward a group of debating Athenians. Mr. Snyder or his editor uses a football analogy. The notion of Microsoft using the tactic of skirting a battle and attacking on the flank or the rear is intriguing. The issue I have is that if Google is indeed in “controlled chaos” mode, it can field disorganized, scattered groups of war fighters. As a result, there may be no battle unit to outflank or get behind. If the Googlers are consistent “chaotic”, Google’s troopsmay be playing one game; Microsoft, another. Second, the data quoted pertain to Web search, not Intranet search. Apples and oranges I submit.

So what?

Six Key Moments in Search and Retrieval

The point of my looking at these three excellent examples of deal analysis is to lead up to the list below. These events are what I consider key turning points in “behind the firewall” search. The Microsoft – Fast deal, while significant as the first and, therefore, the biggest search deal of 2008, has yet to demonstrate that it will rank with these events:

1. In-Q-Tel. Set up in 1998, this is the venture arm of the Central Intelligence Agency. With Federal funding and the best entrepreneurs in the U.S. government, In-Q-Tel seeded companies with promising information access and “beyond search” technology. Without In-Q-Tel and the support from other U.S. entities such as DARPA (Defense Advanced Research Projects Agency), the search market as we know would not exist today. Even Google snagged some Federal money for its PageRank project.
2. Personal Library Software. Matt Koll doesn’t get the same attention accorded to today’s wizards. His 1993 vision and product of Intranet and desktop search were revolutionary products. Mr. Koll delivered desktop search and actively discussed extending the initial product to the “behind the firewall” repositories that are so plentiful today.
3. The Thunderstone Appliance. EPI Thunderstone has been a developer of search tools such as its bullet-proof stemmer for more than a decade. The company introduced its search appliance in 2003. The company correctly anticipated the need some organizations had for a plug-and-play solution. Google was quick to roll out its own appliance not long after the Thunderstone product became available. The appliances available from Index Engines, Exegy, and Planet Technologies, among others owe a tip of the hat to the Thunderstone engineers.
4. IBM STAIRS and BRS. Most readers will not be familiar with IBM STAIRS, circa 1971. I do include some history in the first three editions of The Enterprise Search Report which I wrote between 2003 and 2006, and I won’t repeat that information here. But text retrieval received the IBM Big Blue seal of approval with this product. When development flagged at IBM, both in the U.S. and Germany, the Bibliographic Retrieval Service picked up the mantle. You can buy this system from Open Text even today.
5. In 2002, Yahoo bought Inktomi. At the time, Inktomi was a solid choice for Web search. The company was a pioneer in high-speed indexing and it was one of the first companies to find ways to make use of random access memory to speed query processing. The purchase of Inktomi, however, marked the moment when Google seized control of Web search and, shortly thereafter, Web advertising. With the cash from its dominance of the Web, Google continues its spectacular, unencumbered rise. Had Yahoo done a better job of setting priorities, Google may not have had the easy path it found. Yahoo, as you may recall, made search subordinate to what I call “the America Online” approach to information access. Others talk about the Yahoo! portal or the Yahoo! start page. This deal — not Autonomy’s buying Verity or Microsoft’s purchase of Fast Search & Retrieval — is the key buy out. Yahoo dropped Alta Vista http://www.altavista.com for Inktomi. The Inktomi deal sealed the fate of Yahoo! and the rest is Wall Street earnings history. Google has some amazing brainpower, honed at Digital – Compaq – HP. Jeffrey Dean and Sanjay Ghemawat are, I believe, graduates of the Alta Vista “Gurus’ Academy of Search.” Exalead‘s Francois Bourdoncle did a stint with Louis Monier when both were at Alta Vista. Mr. Monier is now at Google.
6. Hewlett Packard Ignores Alta Vista. The media have defined search as Google. Wrong. Search is Google today, but it was Alta Vista. If Hewlett Packard had been able to understand what it acquired when it tallied the assets of Compaq Computer, it would have “owned” search. Mismanagement and ignorance allowed two key things to take place. First, the Alta Vista brain trust was able to migrate to other companies. For example, eBay, Exalead, and Google have been direct beneficiaries of the years and millions of Digital Equipment research dollars. HP let that asset get away. Even today, I don’t think HP knew how significant its failure to capitalize on Alta Vista was and continues to be. Second, by marginalizing Alta Vista, the promising early desk top search product pioneered a market and then abandoned it. HP is a mass market PC vendor and printer ink company. It could have been Google. In 2003, HP sold what remained of Alta Vista to Overture, later acquired by Yahoo. The irony of this decision is that Yahoo had an opportunity to challenge Google, possibly on patent infringement allegations. Yahoo! did not. Google now controls more than 60 percent of the Web search market and is “the elephant in the room” in “behind the firewall” search. Yahoo’s link up with IBM may not be enough to keep the company in the “behind the firewall” search sector.

Observations

Today’s market has not been a smooth or steady progression. Most of the systems available today use mathematics centuries old. Most systems share more similarities than differences, despite the protestations of marketing professionals at each company. Most systems disappoint users, creating the unusual situation in large organizations where employees have to learn multiple ways to locate the information needed to do work.

The acquisition of Fast Search & Transfer is a financially significant event. It has yet to stand the test of time. Specifically, these questions must be answered by the marketplace:

• Will companies buy SharePoint with technology developed elsewhere, built from multiple acquisitions’ engineering, and open source code?
• Can Microsoft retain the Fast Search customer base?
• Will customers working through some of the Fast ESP (enterprise search platform) complexities have the patience to maintain their licenses in the face of uncertainty about ESP’s future?
• Will Microsoft engineers and Fast Search engineers mesh together, successfully integrating Microsoft’s product manager approach with 10,000 sailboats generally heading in one direction with Fast Search’s blend of rigid Nordic engineering with a cadre of learning-while-you-work technologists?

My view is that I don’t know enough to answer these questions. I see an upside and a downside to the deal. I do invite readers to identify the most important turning points in search and offer their ideas about the impact of the Microsoft-Fast Search tie up.

Stephen E. Arnold
11 January 2008, 3 21 pm Eastern

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