Redmond's software giant acquires Norway's Fast Search & Transfer for $1.2 billion, raising questions about how the technology will affect the Web.
Posted Jan 11, 2008
Microsoft made waves in the enterprise search market this week when it bid $1.2 billion for Fast Search & Transfer of Norway. Analysts see the deal, which significantly expands Microsoft's presence in field, as a major shakeup for the enterprise search market. It also prompted speculation about Microsoft's ambitions for general Web search, now dominated by Google.
The acquisition of Fast will result in a sea change in the enterprise search market, as smaller vendors are snapped up by large corporations, according to Whit Andrews, a research vice president at Gartner. "What this means is that the market for independent vendors of generalist search will go away within three years," Andrews says. In order to survive, independent vendors of enterprise search applications will either need to be acquired or shift their focus to include other areas such as e-commerce. Indeed, the stock prices of some of Fast's competitors soared on the speculation of possible bids.
Fast was founded in 1997 and had a 2006 profit of $3.4 million on revenue of $162.6 million. It was the focus of controversy late last year, as three board members resigned and the company announced it might have to revise its financial results. The news sent the company's shares falling, and analysts quoted in news reports speculated that the drop could have prompted the sale to Microsoft.
Fast's Enterprise Search Platform line of products will complement Microsoft's existing enterprise search tools, including the Office application SharePoint, while giving the company its first search application designed specifically for large organizations. The deal also solidifies the connection between Microsoft and Fast, as the two companies previously had a partnership to provide enterprise search. Microsoft sees enterprise search as a promising new market and Jeff Raikes, president of Microsoft's business division, boasted in an interview with the New York Times that "with this acquisition, we are the clear leader in enterprise search."
While Fast does not offer any Web search products, the move spurred speculation that Microsoft was mounting an offensive against Web search leader Google. "For Microsoft, it's a piece of an overall search strategy," says David M. Smith, a vice president and Gartner fellow at Gartner. "The challenge will be to rationalize all of that and figure out a comprehensive strategy going forward."
While Fast deals only in enterprise search, "the technical know-how could have application in that space," Smith continues. "The big thing is to open a door to leverage it to other parts of search. That's the part they haven't really talked about, but I think that's the part with the most long-term potential."
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