IAC is betting that Web self-service technology, specifically natural-language capabilities, will continue to mature.
Posted Mar 22, 2005
IAC/InterActiveCorp (IAC)'s plan to acquire Ask Jeeves reflects IAC's awareness that people want to use their own language when searching for information online, according to industry analysts. Through the proposed acquisition, announced this week, IAC would acquire online search engine Ask Jeeves in an all-stock deal--IAC will issue about 1.3 shares of common stock for each share of Ask Jeeves common stock in a tax-free transaction valued at $1.85 billion net of cash acquired. IAC is looking to add to its assorted collection of more than 40 consumer Web sites, including Ticketmaster, LendingTree, and Expedia.
IAC/InterActive plans to buy back through its previously authorized share repurchase programs at least 60 percent of the number of shares it will issue for the purchase. The deal is expected to close late in the second quarter or early in the third quarter of 2005.
Ask Jeeves, which has about 42 million U.S. unique monthly users, grabbed the attention of online searchers with its natural language capabilities, but it trails its key competitors Google, Yahoo!, and MSN. Even so, Rebecca Wettemann, vice president of research at Nucleus Research, describes the acquisition as an example of the maturity of Web self-service into more than just static information. "A couple of years ago it was really hard and expensive to effectively do what you want," she says, but "today, with Ask Jeeves, people are recognizing how helpful and powerful a tool it can be." She also expects more end-user companies to consider natural-language Web self-service solutions to enhance how they deliver customer service. "More companies are going to realize that it doesn't have to be a very expensive proposition, and that it can actually do a lot to enhance the responsiveness and the customer satisfaction of the Web site."
According to Doug Warner, head of applied research at RightNow Technologies, however, the answer to whether more people are looking for natural-language search engines is not a definite yes or no. Instead, he says, the market is starting to see two branches in natural-language searching emerge: grouped result sets and ontological processing. He cites Northern Light as an example of grouped result sets. It returns groups of documents on a general topic, and then allows the user to drill down to see a more focused representation. Ontological processing, he says, is when ontologies are the synonyms and hierarchical representations of things. For instance, "a Toyota is a specific type of car, [which] would be one type of ontological relationship, and then automobile is a simile to car," he says, adding, "I didn't see Ask Jeeves as currently having an offering in those [two] areas, but that's not to say they weren't working on it."
Still, Ask Jeeves is certainly not the only technology equipped with a natural-language search engine. For end-user companies looking to improve their sites with more conversational, natural-language components, Wettemann contends that several companies offer such functionality. "RightNow is a great example that started with the self-service customer support and now offers a number of other things...and is one of the leaders in providing natural language query and self-service via the Web," she says.
Additionally, conversational software provider Conversagent incorporates natural-language self-service functionality in its platforms. According to Wettemann, however, the company focuses more on trying to replicate the actual customer service agent experience. "What's interesting about what they do is that it's not real time, but near-real time," she says. "With Ask Jeeves I ask a question, I get the Web pages back. With Conversagent it's almost like I'm having a conversation or chat, so I ask a question and an answer comes back to me in what could look like an instant messaging window."
Conversagent CEO Stephen Klein contends that Ask Jeeves does not give the customer what he or she wants, one right answer to a query. "Perhaps IAC may make an attempt to shoehorn that technology into its service, but the model for Ask Jeeves is, you ask a question and get a list of answers," he says. "That's yesterday's technology."
Wetteman says, however, that the Ask Jeeves acquisition "brings visibility to the fact that people like to be able to interact the way they want."
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