Microsoft Passed Over Cambridge Enterprise Search Firm Endeca Before Acquiring Norway’s Fast

1/10/08Follow @wroush

A Microsoft product manager says the software giant evaluated several companies selling advanced search tools for businesses, including Cambridge, MA, startup Endeca, before deciding to offer $1.23 billion for Fast Search & Transfer of Oslo, Norway, which has a 200-employee outpost in Needham, MA. But that may be just as well for Endeca, in light of uncertainty over Microsoft’s plans for Fast’s Massachusetts employees.

Microsoft’s bid for Fast, announced January 8, is intended to help round out its product selection in the area of “enterprise search,” meaning software that companies implement to help customers find products online or to help employees navigate internal corporate knowledge bases. Fast provides a range of heavy-duty search technology used by big companies such as the Washington Post, Getty Images, Best Buy, and Lexis Nexis to manage their intranets, their external-facing corporate sites, and their public databases. Microsoft, by contrast, offers two lower-end search-related software products: Search Server 2008 Express for small businesses and SharePoint Server 2007 for medium-sized organizations.

Jared Spataro, group product manager for enterprise search at Microsoft, told me that the company decided about two years ago to add major features to SharePoint, which mainly provides a collection of collaboration and document management tools. “Search bubbled to the top very quickly, based on customer research,” Spataro says. “Starting in October of 2006, we introduced some of our own innovations—Search Server Express is a great example—and we also started to look around at what an acquisition could get us. We certainly looked at all the high-end vendors—Autonomy, Fast, and Endeca—to see what we could get.”

Endeca is known for its “guided navigation” aids that organize search results into relevant categories, while San Francisco-based Autonomy focuses on servers that retrieve information using Bayesian inference and other advanced forms of pattern matching. Asked whether Microsoft’s evaluation of Autonomy or Endeca advanced to the stage of actual acquisition talks, Spataro demurred. “Microsoft explored a variety of ways to increase its investment in this rapidly growing market segment,” he said. “However, we do not disclose specifics of those discussions.”

Spataro did, however, list several reasons why Fast stood out against its competitors. “First, they had an incredible vision for what search could be, and they’ve extended that vision through leadership; one great example is their FastForward conference, which they’ve made into an event for the whole industry,” Spataro says. “Number two was their people—we felt they had the best minds out there when it comes to understanding search. Number three was the technology. We were very impressed with it, after spending time with it ourselves and consulting with analysts.”

Spataro says that Microsoft was especially impressed with Fast technology that helps users refine search results by entering additional details as they go. “In Internet search, you ask a question through a couple of keywords, and you get tens or hundreds or thousands of pages of results,” he says. “But with Fast, if you go to BestBuy.com—which has really built their business on Fast technology—and you are looking for a computer or an MP3 player, you can ask a question, and then you can narrow it down, say, to MP3 players for less than $200. Slowly but surely you can refine that question until you have exactly what you are looking for.” (While those features are similar, on the surface, to Endeca’s guided navigation aids, Endeca says its software is specialized for data with more built-in structure.)

Outside observers say the acquisition makes sense for Microsoft, especially given the company’s desire to catch up with Google in the market for search technology. “Microsoft does not have search as its core DNA, and they desperately … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://Rrankk.com Erik Sebesta

    For 1.23 billion, hopefully those Fast employees won’t need to update their resumes!

    BTW, gotta like the number of 1.23 — wonder who suggested that during the negotiations.