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Microsoft takes the FAST track into enterprise search

Microsoft puts up $1.2 billion for FAST, which will give the struggling search engine company an R&D boost and improve integration between applications and archives.

Microsoft's proposed $1.2 billion acquisition of search engine developer Fast Search and Transfer (FAST) should benefit the storage companies that partner with FAST, while enabling Microsoft to compete with Google in enterprise search, according to analysts.

FAST's OEM partners include Arkivio Inc., Hitachi Data Systems (HDS), CA Inc., EMC Corp., CommVault Systems Inc., Mimosa Systems Inc. and Permabit Inc. These storage vendors rely on FAST to provide search capabilities for their archive and e-discovery products.

FAST's board of directors and major investors have approved Microsoft's tender offer, and the Redmond, Wash., computing giant expects the deal to close around mid-year.

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Enterprise Strategy Group analyst Brian Babineau said the acquisition is probably saving financially troubled FAST. For the third quarter of 2007, FAST reported net losses of $100 million on revenue of $35.6 million, down from $42.5 million in revenue in the third quarter of 2006.

"Standalone search companies are having a difficult battle," Babineau said. "The acquisition was something FAST absolutely had to consider." Recent restructuring at the company had seen layoffs in the group tasked with building the software used by OEMs.

Dave West, CommVault Systems Inc. vice president of marketing and business development, said the deal underscores the need for good search in data management products. In an email to, West wrote, "Data only has value when it can be located, accessed and indexed, and this acquisition brings that issue to the forefront of any data management conversation."

Jeff Raikes, president of the Microsoft Business Division, said enterprise search has reached "a tipping point," and Microsoft intends to push aggressively into that market. "We believe enterprise search will be for workers what Internet search is for consumers today," he said on a Tuesday afternoon conference call to discuss the deal.

Babineau said that's a sign Microsoft is thinking about competitive offerings to Google's OneBox search appliance. While Google's search engine began as a consumer application, FAST has always been focused on enterprise search, Babineau pointed out.

Microsoft officials said FAST will be added to SharePoint Server, but didn't give any other details about what's planned for the search engine. Analyst Arun Taneja of the Taneja Group said if Microsoft integrates search and indexing into applications, such as Exchange, it could take some of the data management burden out of the hands of storage administrators. It would also keep archiving vendors from having to build search engines.

"Archiving is a lot more than search," Taneja said. "That's why most of the archiving and e-discovery companies today get this IP from FAST in the first place -- it's not core to their business."

According to StorageIO Group analyst Greg Schulz, "Right now all of these tools are doing reactive, after-the-fact discovery. But the application that creates a piece of data will always 'know' more about it than any other application. If Microsoft can capture more information when data is created, then moving forward, the real value [of archiving products] will shift from away from discovery, toward analysis and interpretation of the data."

The experts expect Microsoft to follow this move with further forays into enterprise data storage and archiving, but also said that wouldn't be the kiss of death for third-party archiving systems.

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