Microsoft's FAST Bid Raises Questions

Microsoft's $1.2 billion bid to buy data classification and search software supplier FAST has the industry buzzing with questions.

Some wonder why Microsoft is emphasizing Sharepoint as the vehicle of choice for FAST's capabilities. Others question FAST's position in the market and how that will change the shape of enterprise search once Microsoft takes over.

According to IDC figures, FAST was nearly tied with Google in second place for market share in 2006: Autonomy ranked first, with 15.2 percent of $1.4 billion in worldwide standalone software revenues (an overall figure that grew 20 to 25 percent in 2006); FAST ranked second with 8.9 percent; Google had 8.5 percent; and Endeca, a relative newcomer, ranked third, with a 3.8 percent share.

IDC analyst Sue Feldman says her firm hasn't released figures for the enterprise search market in 2007 -- despite the fact that FAST has publicly posted forecasts of $1.75 billion for last year's enterprise search market and $2.129 billion for 2008, quoting IDC. Feldman also warns that there are complexities that make the 2006 numbers an incomplete tale on their own.

"Market share in this space varies from one year to the next; the little ones edge up on the big ones, and some disappear altogether," she says. Verity and Zantaz, for instance, both disappeared as individual entities after being acquired by Autonomy for $500 million in 2005 and $375 million in 2007, respectively.Another issue is that Microsoft, along with Oracle, doesn't show up in vendor shares reported by IDC because they both incorporate search into other products -- Microsoft in Sharepoint, for example.

"The market is a mixture of a multitude of technology vendors, who pursue a largely OEM business, and a few platform and product vendors who are more visible," Feldman states. What's more, some of the big search companies, like FAST, depend on under-the-radar players like Lexalytics, Teragram, and Basis Technology for key elements of their applications.

In short, it's tough to tell what position FAST has in the market now, let alone what will happen once Microsoft assumes leadership.

Other questions surround Microsoft's choice of Sharepoint as the platform on which it will mount FAST's wares. Until its third release in 2007, Sharepoint wasn't the gangbuster Microsoft had hoped for. Since Microsoft's enterprise search team is reportedly part of the Sharepoint division that was behind the bid for FAST, it's worth asking whether Microsoft is hitching its wagon to the right star.

One analyst thinks Sharepoint is poised for greatness. "Sharepoint is a juggernaut," says Peter O'Kelley of the Burton Group. "It's turning into one of Microsoft's most successful products." The addition of key features in the latest version has finally made Sharepoint a leading contender against collaboration offerings from IBM and Oracle, he notes.Another question that's surfaced has to do with how well FAST will support OEMs other than Microsoft. Reportedly, FAST cut back its OEM team and alienated some OEM customers shortly before the Microsoft announcement. Will FAST's other products wither on the vine?

FAST didn't get back to us by press time, but O'Kelley says he asked FAST and Microsoft about this during a conference call yesterday -- one apparently after the main call in the afternoon. "FAST had a financial meltdown awhile ago and redoubled its focus on enterprise search," O'Kelley says. "They may have eliminated some of the products not directly associated with enterprise search."

In the near term, Microsoft and FAST customers will be waiting to see how the deal plays out in terms of both companies' strategies. For now, the plans seem to be as much in flux as the enterprise search market itself.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.