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Microsoft Chomps and Swallows Fast

It’s official. On April 24, 2008, Fast Search & Transfer became part of the Microsoft operation. You can read the details at Digital Trends here, the InfoWorld version here, or Examiner.com’s take here.

John Lervik, the Fast Search CEO, will become a corporate vice president at Microsoft. He will report to Jeff Teper, the corporate vice president for the Office Business Platform at Microsoft. The idea–based on my understanding of the set up–is that Dr. Lervik will develop a comprehensive group of search products and services. The offerings will involve Microsoft Search Sever 2008 Express, search for the Microsoft Office SharePoint Server 2007, and the Fast Enterprise Search Platform. Despite my age, I think the idea is to create a single enterprise search platform. Lucky licensees of Fast Search’s technology prior to the buy out will not be orphaned. Good news indeed, assuming the transition verbiage sets like hydrated lime, pozzolana, and aggregate. Some Roman concrete has been solid for two thousand years.

This is an example of Roman concrete. The idea of “set in stone” means that change is difficult. Microsoft has some management procedures that resist change.

A Big Job

The job is going to be a complicated one for Microsoft’s and Fast Search’s wizards.

First, Microsoft has encouraged partners to develop search solutions for its operating system, servers, and applications. The effort has been wildly successful. For example, if you are one of the more than 80 million SharePoint users, you can use search solutions from specialists like Interse in Denmark to add zip to the metadata functions of SharePoint, dtSearch to deliver lightning-fast performance with a natural language procession option, Coveo for clustering and seamless integration. You can dial into SurfRay’s snap in replacement for the native SharePoint search. You can turn to the ISYS Search System which delivers fast performance, entity extraction, and other other “beyond search” features. In short, there are dozens of companies who have developed solutions to address some of the native search weaknesses in SharePoint. So, one job will be handling the increased competition as the Fast Search team digs in while keeping “certified gold partners” reasonably happy.

This is a ceramic rendering of two of the “10,000 Immortals”. The idea is that when one Immortal is killed, another one takes his place. Microsoft’s certified gold partners–if shut out of the lucrative SharePoint aftermarket for search–may fight to keep their customers like the “10,000 Immortals”. The competitors will just keep coming until Microsoft emerges victorious.

Second, Microsoft has proliferated a number of search solutions. In the third edition of the Enterprise Search Report, I cataloged most of them; for example, SQLSearch’s search function and the embedded search function in Windows desktop operating systems, and the search function in Outlook Express. Since I wrote that edition of the Enterprise Search Report, Microsoft has added additional search functionality to the dozen or more systems I identified in 2006. For example, if you load Microsoft Dynamics CRM, you will get a search function and business intelligence operations. Based on my look at this product and a preview of its twin Microsoft Live CRM, there will be some challenges within the Dynamics server system itself and the work needed to create a seamless Salesforce.com – Google type solution. Also, the Microsoft Live.com team has been busy making changes and fixes to the Web search engine. Fast Search arrives with a heck of a Web spidering and search system that’s used for some third-parties. You can see this technology in action at AllTheWeb.com, a Yahoo property. If Microsoft acquires Yahoo, then presumably some type of rationalization among the Web search functions at Microsoft, Fast Search, and Yahoo will need some thought.

Microsoft has allowed many “search and retrieval” flowers to bloom. It will be an interesting task to manage the many different species and varieties.

Third, Microsoft’s Xbox team at one time licensed the Mondosoft search solution. I have lost track of that deal, so this type of “off the reservation” approach to search may no longer be an issue. Unexpected developments can occur in an organization with nearly 100,000 people working under the Microsoft “agenda”, charged with testosterone, fired with competitiveness, and organized by Microsoft’s vaunted product manager system.

Finally, Microsoft has to get search right. Let’s look at a few of the reasons.

A Perfect Storm

I never read the book Perfect Storm, which is about this big storm, nor did I see the motion picture version of the big storm. I grew up on the prairie of Illinois. When bad weather hits the farm lands of central Illinois, you and your favorite cow could be smashed against a barn, maybe even worse.

Microsoft faces a “big storm” in search, content processing, and text mining. The storm will pass, but it’s not clear how much the “search storm” will perturb Microsoft in general and its enterprise search work in specific.

Microsoft is in the midst of a major environmental disturbance. There’s the pressure wave from Google. With its expanded relationship with Salesforce.com and its rapidly growing base of enterprise Google Search Appliance licensees, and its developer push, Google continues its game of technical leap frog.

The broader search-and-retrieval environment is grousing for more than key word search. The shift can be seen in the stampede toward “social” technologies. These promise to generate metadata that can go beyond indexing the words in a document. Social search implies knowing a great deal more about the provenance of a document or other information object; for example, who changed it, who reviewed it, and similar usage-centric metadata that are useful to people overloaded with laundry lists of search results. Users also want answers. What’s different now is that users are actively looking for ways to make information useful. Companies that few people in the search punditry business track are growing rapidly as traditional search vendors struggle for revenue. Connotate and Sinequa (both profiled in my new study Beyond Search) and dozens of others are offering information solutions that are quite useful to users. Indeed, if traditional search-and-retrieval vendors were successful, then the problems facing traditional vendors would not lead to sell outs, cash infusions, and constant repositioning.

There is a demographic shift underway. The baby boomers are on their way out. Their replacements are people willing to push in new directions. As even younger cohorts enter the work force, the traditional vendors will find themselves forced to make even more radical changes than Microsoft’s embracing the “mesh” or Sun Microsystems (once a hardware company with an operating system) morphing into a blend of “closed openness” to fire its revenue jets. Demographic change means innovation from surprising sources. Even Google has to be concerned about a start up leap frogging over their technology. Google is slowing down, losing focus, and is, therefore, vulnerable to the arteriosclerosis that has imperiled such firms as Cisco, Hewlett-Packard, and IBM. These companies have to work very hard to counter the effects of size and age.

Other exogenous forces buffeting Microsoft include:

• Becoming a value stock at a time when Microsoft is likely to need more money, not less
• Increasing competition for top technical talent which pumps up the costs of doing business
• Maintaining employee morale
• Dealing with continued legal jousts from the wild and wonderful European community
• Making headway in the online world which is increasingly falling into the hands of Amazon, Facebook, and Google
• Changing customer expectations about ease of use and reliability in the face of Apple’s strength in consumer products and in personal computing.

Microsoft is dead in the center of these forces. It also has its own idiosyncratic issues to resolve. For example, Microsoft is several different companies operating under one brand. The needs and dynamics of these different companies are often at odds. What’s good for the server division may not be good for the desktop application unit. The notion of cloud computing puts some pressure on Microsoft divisions depending upon on-premises software to generate revenue. The Xbox folks thought that Sony’s falling on its sword would produce a clear path to market domination. Then the Nintendo poked its tendrils into the game ecosystem. I don’t think the Xbox teams worries about SharePoint search. Microsoft like other big companies faces problems created by big, new markets such as those in China and India. Cost control, not surprisingly, is an issue at Microsoft. The Yahoo deal won’t make much difference in the increasing sensitivity Microsoft will have to reduce expenses. The economic “Big Rock Candy Mountain” is eroding quickly in today’s voracious financial markets.

What’s Ahead for Search at Microsoft?

From my log cabin in Harrod’s Creek, Kentucky, I am far from the “action” in the big cities where the true wizards thrive. You will want to keep this in mind as I run through my opinion about Microsoft and search in the next 12 months, maybe 18 months to give myself a cushion:

1. A six to nine month honeymoon. Not much will happen. Microsoft is too big and Fast Search too tied to its enterprise search niche for the two bedfellows to know much about one another’s foibles and oddities. This is great news for most Fast Search customers because it gives them time to make contingency plans and check out the “what we do and not what we say” side of the tie up
2. More pressure from Google to find a fix and fast. With a modest action, Google can trigger a massive reflexive response from Microsoft. A Google search innovation will set the stage for a new search initiative, which makes the Fast Search mission more complex and more important than it already is
3. Innovation from the “certified gold partners.” Some of these companies have invested time and money to create search products for SharePoint. If Microsoft narrows the doorway to the tens of millions of SharePoint installations, these companies will have no choice but find a way around Microsoft. For Redmond, former partners are as big a threat as the one Google poses.
4. The management blender. Microsoft’s most successful managers know the ropes and have evolved a very interesting style. There’s a combination of cheerful optimism and a ruthless confidence that “I’m smarter than anyone else”. The Fast Search team is really “smart” as well. What’s likely to happen is that the two definitions of “smart” will have to find a happy middle ground. Reaching a real-world compromise may impose unplanned time and and technical burdens. If there’s no middle ground, then there will be a mock battle to identify a “winner”. In this scenario, I would bet on the Microsofties skilled in the ways of Redmond. No one wants to lose their turf or their place in the Microsoft pecking order without a fight.
5. Increased competition. The dozens of companies offering new ways to tackle data management and search will keep coming. In Persian war fare, there was the “10,000 Immortals” unit. The idea was that when one of these warriors was killed, another took his place. Microsoft is fighting the “new search” immortals. As quickly as one search challenger is killed, another springs into the gap. Tiresome work: if Microsoft becomes fatigued or makes a strategic miscalculation, a routine skirmish could become a rout.
6. Yahoo. If this deal takes place, Microsoft gets the Yahoo search systems. There are quite a few of them; ranging from InQuira (a company based on three smaller companies), Stata Labs’ technology, the search engine for Yahoo Web, and others, including Fast Search’s AllTheWeb.com support. More work for those at Microsoft who have to rationalize, streamline, and manage costs.

In my view, the next 12 to 18 months will be interesting. How confident am I in my analysis? I think I’m in the 85 to 90 percent range. If I’m right, Microsoft will not emerge significantly stronger in search than it is now. The reason? Multiple factors. Some easy to manage, others not easy to control or direct.

Furthermore, the honeymoon may be sufficient time for Microsoft’s and Fast Search’s most fierce competitors to exacerbate the technical, loyalty, and revenue challenges associated with search, content processing, and text mining. Are there some ways to avoid these problems? Absolutely, but I’m keeping those under my hat for now. What’s your take on the new tie up? Agree or disagree?

Stephen Arnold, April 26, 2008

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