Microsoft Buys Into High-end Enterprise Search With FAST

LeslieowensBy Leslie Owens and Ken Poore

The value of high-end search technology was demonstrated today as Microsoft offered to acquire FAST Search & Transfer for approximately $1.2b. The transaction, endorsed by FAST management and key investors, is expected to be completed in 2Q08. We see this as a good deal for FAST, a good deal for Microsoft and a good deal for customers. This is a transformative event for the enterprise search industry.

Let’s set the stage: for years, pure-plays like Autonomy, FAST, and Endeca have shouldered the burden of explaining the rationale for enterprise search as they have defined the market.  Now infrastructure players like Microsoft, Oracle and IBM have woken up to this opportunity. This year will be the year to determine what enterprise search is, and what it isn’t: A platform? A system? A feature? Where does it belong in the enterprise and what is it for?

With this acquisition, Microsoft leapfrogs IBM and Oracle, who have both been rolling their own nascent search initiatives -or doing small acquisitions. Microsoft is now in a strong position to offer a full menu of search products, from basic implementations that compete directly with Google’s appliances to high-end, massively scalable media and commerce systems. They also significantly extend into features like auto-categorization, entity extraction, and clustering.

For Microsoft, FAST makes a lot of sense. Microsoft’s current search strategy was centered on Microsoft Office SharePoint Server 2007 (MOSS) and its spin-off Microsoft Search Server Express. SharePoint’s search has consistently been criticized by high-end search providers as too lightweight – its SQL Server-dependent engine never proved to scale massively, and its search across unstructured content was superficial when compared to the deep semantic algorithms of market-leading search vendors. FAST’s strong search technology delivers Microsoft needed credibility outside the firewall and among major media outlets. And the acquisition saves Microsoft the cost and time of completely re-architecting its own search house. In addition to scalability, Microsoft buys itself into the big leagues with an enterprise-savvy connectivity solution in FAST’s Unity search federator. 

FAST’s strengths are derived from a well-regarded search technology platform that is at the core of many media, entertainment, communications, retail, and financial services web sites. FAST’s engine also powers the search in many large enterprises, reaching across the breadth of intranets, file shares, content management, databases, and other core business content sources. FAST touts Comcast, Best Buy, Deutsche Telekom, Reuters, Dell, TV Guide, CareerBuilder, and others as flagship customers—customers Microsoft shall claim as well.  FAST’s ESP platform, like the other leading search engines, brings a much stronger set of semantic and linguistic indexing capability that will greatly improve discovery of unstructured information over SharePoint’s limited keyword-centric search. 

FAST had a tough 2007, though. Well-publicized gaffes in how they recognized revenue forced a major restructuring of its management team, a realignment to focus on core (and lucrative) competencies, and a reduction in its workforce. What emerged was a company with a strong customer base and core technology that had a depressed stock price and was primed for takeover. Microsoft and FAST are established partners. Many SharePoint customers have already upsized their search to FAST when they outgrew the limits of SharePoint.

What does it mean to I&KM Pros managing a search initiative? If you are an existing SharePoint and FAST customer, you will (eventually) have a simplified vendor relationship, a changing professional services model, and a strengthened R&D team behind this functionality. You should save money on licensing too. For I&KM Professionals just starting to evaluate products, it will be harder to justify the purchase of an independent search company when the enterprise is already aligned behind Microsoft as an infrastructure solution for business productivity. Current customers of pure-plays Autonomy or Endeca should prepare to defend their choices with IT and business stakeholders who may be influenced by Microsoft/FAST’s unified infrastructure story.

On the positive side, we expect this acquisition will drive down the price point for high-end search. Microsoft won’t be able to slide in a line-item that costs hundreds of thousands of dollars into a SharePoint license agreement or the price tag for a SharePoint installation will become too big to swallow. This pricing pressure will have a ripple effect through the industry. Those who are negotiating new license agreements with independent search companies like Autonomy will soon have a big stick to use. This acquisition is another linchpin in Microsoft’s enterprise workplace strategy--FAST fills a big hole for enterprise-scale information discovery and it further builds SharePoint’s momentum for content management and collaboration.

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Comments

re: Microsoft Buys Into High-end Enterprise Search With FAST

Ken,It's reasonable to assume that a large reason for Microsoft's acquisition was to cover the gaps in its own search technology, as your analysis suggests. But how does the acquisition help SharePoint's core market -- the mid-market? Even if this move does drive down the price of high-end search, it's not going to come down enough to get the mid-market companies to bite. If I'm a 500-person law firm in the midst of discovery and I need to run a Boolean or proximity search, but I'm still stuck with standard SharePoint search, then this acquisition has really done nothing to help me (unless I want to pony up the money for the FAST-powered solution).Are we missing something here, or is this deal more about adding a high-end capability to its quiver vs. infusing the technology throughout a range of products? Some of your analysis seems to suggest it's the latter, but would we really start seeing the fruits of this any time this decade if that were the case? Do we really foresee FAST powering MS' low-end Express Search?On a related note, while this news certainly puts a damper on high-end vendors' forecasts, it looks like a boon for the mid-market players -- minimize risk with a point solution while you play the wait-and-see game. Of course, that's a self-serving comment on our part, but it doesn't change the fact that it's true. Thank you Bill Gates!

re: Microsoft Buys Into High-end Enterprise Search With FAST

Nice post guys. This is an interesting story and I look forward to following it and reading more from you in the future. I'm not as certain as the two of you that this makes financial sense for MS and wonder what the short-term and long-term ROI on this $1.2 billion investment. I've written further on this and quoted you (and linked to you) on www.IntranetBlog.com(http://intranetblog.blogware.com/blog/_archives/2008/1/9/3456869.html)Regards, Toby Ward

re: Microsoft Buys Into High-end Enterprise Search With FAST

I like the post, especially the notion that defining what enterprise search is and not needs more clarity.I believe "Platform" should be the way forward. Transparent and meaningful searching and matching of all relevant entreprise information, regardless of its origin and modality, is required to survive in the age of non-information overload.Staying on the "Feature" level will not enable enterprises to fully exploit the combined intelligence hidden in the various sources. The required speed to find meningful answers and the sheer volume of information to scan also drive the need for a platform approach.There are some smaller companies than the ones you mentioned who picked up this idea already and turned it into a working solution. E.g. check out www.multimodalfusion.com

re: Microsoft Buys Into High-end Enterprise Search With FAST

Why would someone spend the amount of money required on a FAST Unity license when there's a free open source alternative out there with a stronger feature list?http://sesat.no