Microsoft’s aggressive pursuit to own your enterprise intranet business just dramatically jumped. Redmond has offered pay $1.2 billion for Norway-based search vendor Fast Search & Transfer.

During a conference call for press and analysts, MS needs Fast’s search experts for  large, enterprise search capabilities for “queries involving billions, not just millions, of sources” said Jeff Raikes, MS President of Business Systems, as quoted by ZDNet's Mary Jo Foley in Microsoft looking to Fast for scale, Web search help. Mary Jo states in her analysis that Fast has a more sophisticated development platform, but wonders why MS paid so much for a search platform… 

“Fast also has a “more sophisticated” and granular development platform from which Microsoft will benefit, in terms of honing domain-specific Intranet and Internet searches, Raikes told press and analysts.

Additionally, Microsoft will be looking to Fast for help with Web search. Raikes declined to get specific about exactly how Fast’s technology will dovetail/complement Microsoft’s Live Search, claiming that the proposed merger still needs to pass regulatory scrutiny.

(Help can’t come a moment too soon on the Web search front, as Microsoft continues to lose share to Google, at least according to new data released by Hitwise on January 8.  Microsoft dropped from 9.8 percent of Web searches to just over 7 percent in December 2007, Hitwise is reporting.)

Although Fast has a solid customer and partner list, some market watchers are questioning why Microsoft paid $1.2 billion for a company that is in financial distress. (Fast may end up restating its 2006 and 2007 financial results, and three of its board members resigned at the end of last year).”

What’s curious about this decision is that Google owns search on the external Web, and they and Autonomy and Endeca are dominating the enterprise intranet search arena. In short, MS has paid 3-4 times what they invested into Sharepoint 2007.

Microsoft owns the employee desktop and Sharepoint has made big strides to bolster this. But they are losing the search battle and this latest move looks quite desperate. FAST give MS some serious, heavy-weight search technology that is sorely lacking by Sharepoint, a point of weakness and criticism highlighted by Forrester’s Leslie Owens and Ken Poore in Microsoft Buys Into High-end Enterprise Search With FAST:

“With this acquisition, Microsoft leapfrogs IBM and Oracle, who have both been rolling their own nascent search initiatives -or doing small acquisitions. Microsoft is now in a strong position to offer a full menu of search products, from basic implementations that compete directly with Google’s appliances to high-end, massively scalable media and commerce systems. They also significantly extend into features like auto-categorization, entity extraction, and clustering. 

For Microsoft, FAST makes a lot of sense. Microsoft’s current search strategy was centered on Microsoft Office SharePoint Server 2007 (MOSS) and its spin-off Microsoft Search Server Express. SharePoint’s search has consistently been criticized by high-end search providers as too lightweight – its SQL Server-dependent engine never proved to scale massively, and its search across unstructured content was superficial when compared to the deep semantic algorithms of market-leading search vendors. FAST’s strong search technology delivers Microsoft needed credibility outside the firewall and among major media outlets. And the acquisition saves Microsoft the cost and time of completely re-architecting its own search house. In addition to scalability, Microsoft buys itself into the big leagues with an enterprise-savvy connectivity solution in FAST’s Unity search federator.”

This is a great deal for FAST, but at $1.2 billion, can MS really turn this investment into positive ROI with competition such as Google and Autonomy staring them down? I’m not so sure…

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