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Tuesday, January 8, 2008 by MWD Editor
Microsoft today announced that it has offered to acquire Norwegian search vendor Fast Search and Transfer (FAST) for approximately $1.2 billion, or 19 Norwegian kroner per share.
There are two interesting aspects to this. Firstly – assuming the acquisition goes ahead – the removal of FAST as an independent company will leave Autonomy to truly dominate the enterprise search market. Following its acquisition of arch-rival Verity in 2005, the head-to-head battle between FAST and Autonomy in terms of quarterly revenues fell by the wayside, and by Q3 2007 Autonomy’s revenues were more than double those of FAST for the three month period. Alongside this, FAST has apparently been having some problems for the last few months; its Q3 07 revenues were down 16% on the same quarter in the previous year, and there have since been rumours in the blogosphere of accounting fraud accusations. So against this backdrop, the acquisition bid is perhaps less surprising.
However, the other interesting factor is that it is Microsoft doing the bidding. Microsoft is reknowned for picking up small software companies with good technologies – often to plug gaps in its offering, either in terms of technology or market coverage. However, at $1.2 billion, this can hardly be described as a small acquisition, and furthermore, its search focus is something into which Microsoft has already invested significant resources in terms of R&D. Clearly, as a best-of-breed solution, the FAST ESP software is more sophisticated, powerful and flexible than Microsoft’s own capabilities, and its configurable, non-black box, approach to search has the potential to fit in well with Microsoft’s products. However, FAST has a significant existing customer base which will need to be handled carefully to avoid giving too much advantage to Autonomy or smaller players such as Endeca, and it will be interesting to see whether the software remains a distinct business or becomes part of the Microsoft SharePoint Server solution.
A final point of note is that FAST has itself made a number of acquisitions in the last year which may be of interest to Microsoft: AgentArts, acquired in July, provides personalisation and recommendation technology; bWise, also acquired in July, provides business intelligence capabilities; and RetrievalWare, acquired from struggling search vendor Convera in August, provides yet another substantial enterprise search platform, this time with a distinct public sector focus. If the acquisition does indeed go ahead, Microsoft has got some serious work on its hands to sort out the FAST technology.