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

1/10/08Follow @wroush

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want to have search as their core DNA, so I think this was a smart acquisition, to go after the higher end of enterprise search,” says Tom Wilde, CEO of local multimedia search startup EveryZing and a former vice president of marketing for Fast.

Wilde says Fast is a better match for Microsoft than either Endeca or Autonomy, both because Fast’s technology is capable of indexing so-called “unstructured” or non-textual data, and because the company offers a variety of software products ranging from mobile search to legal discovery and regulatory compliance. “Endeca has really done a nice job solving the e-commerce problem, which is a structured search problem, but it does not have a particular strength in unstructured search, and Fast really does represent the best core technology there,” says Wilde. “Also, Microsoft needed a very horizontal technology to go after the enterprise, and Autonomy and Endeca just aren’t horizontal enough.”

An executive I contacted at Endeca agreed that Fast and Endeca offer very different products. “They have pretty good technology, but they’re aimed at a slightly different problem from the one we’re attempting to tackle,” says public relations manager Craig VerColen. “Fast is building a fact-finding kind of infrastructure, whereas we are more famous for guided navigation. Rather than having people throw words in a box, we’ve said they should have some context. Knowledge workers inside the enterprise and consumers looking to buy a product may not know what’s available. Our success to date has been attacking these older problems in a completely new way. Microsoft is talking primarily about enhancing SharePoint and access to documents; that’s one part of the problem we solve, but Endeca focuses on a very different problem, with more highly structured datasets.”

Like Spataro at Microsoft, VerColen is mum on whether Microsoft approached Endeca about a potential acquisition. “In terms of whether we were involved in those discussions, I can’t comment,” he says. (VerColen does say, however, that Endeca is preparing for some kind of investor exit scenario. “We’re a typical VC-backed company, whether your exit is either going to be to file for an IPO, be acquired, or go out of business,” he says. “We’re successful enough that we’re not going to be in that last category, so for us, it will be one of the other two. We’ve really just been trying to prepare ourselves for either eventuality, and to begin to act a bit more like a public company, and make sure we’ve got the underpinnings in place.”)

Endeca employees may well be breathing a sigh of relief that a Microsoft merger is not in the cards, given Microsoft’s history of assimilating acquired companies’ software into existing product lines and often downsizing the remaining organization. Fargo, ND-based Great Plains Software is one example; Microsoft acquired the company in 2001 and recast its accounting software as an add-on for Microsoft SQL Server.

In that case, though, Microsoft kept and in fact expanded Great Plain’s Fargo campus. It’s not clear that Fast will be so lucky. According to a report yesterday in the Boston Globe, Kirk Koenigsbauer, Microsoft general manager for the SharePoint business group, said Microsoft would retain Fast’s 750 employees in Oslo as well as its operation in Needham. But when I asked Spataro yesterday specifically whether Microsoft will retain the 200-odd sales, marketing, and service employees in Fast’s Needham office, he said that matter hadn’t been decided. “It’s just too early for all those questions now,” he said. “We are just barely beginning to do some of the planning.”

At least one observer thinks Fast employees in Massachusetts might want to start updating their resumes. “I’m skeptical that they would keep them,” says EveryZing’s Wilde (who, coincidentally, was Koenigsbauer’s college roommate). “If you look at Microsoft’s modus operandi, they fairly quickly fold new companies into the Microsoft flagship. I see Fast eventually becoming just an extension of the SharePoint brand. Sales is a slightly different animal, but I’d be skeptical that Microsoft would want to have a big sales and marketing operation in Needham over the long term.”

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.