Outside Innovation

Why Microsoft Is Acquiring FAST

On January 3, 2008, we emphasized the strategic importance of focusing on enterprise search in 2008 to improve the customer experience you provide. Microsoft seems to agree. On January 7th, Microsoft offered to buy Norwegian enterprise search provider FAST Search and Transfer for $1.2 billion. Here’s Sue Aldrich’s analysis of this latest move:

This is unquestionably good news for both FAST and for Microsoft. FAST had been a juggernaut of growth: in 2005 it was poised to overtake Autonomy, the other large search-focused ISV. But in 2006 FAST faltered, seemed to lose track of its identity, grasped at a series of strategies, and today is half the size of Autonomy. Microsoft will have no such strategic collywobbles.

Microsoft gains some strategic assets with FAST. Microsoft, until very recently, had only the most basic of search capability incorporated in its products. It’s difficult to comprehend that in so many years of investment Microsoft should have produced so little, but there you have it. In the past month, Microsoft has released its first advanced search engine, a first release that will take some years to catch up to the technology already incorporated in FAST’s Enterprise Search Platform (ESP).¹ With the addition of this technology, Microsoft could actually compete in the search market. Of course, before Microsoft will do that, Microsoft will have to integrate ESP into Microsoft’s software platforms, marketing strategy, and partner programs. This will take some time: Microsoft has leapfrogged its technical sophistication, but perhaps landed in mud to its hips, and there is a great deal of effort to extricate itself and get cleaned up.

IS MICROSOFT READY FOR MICROSOFT’S “NEW DAY?”

You have to admire the orchestration and execution of Microsoft’s official launch of Windows Vista, 2007 Microsoft Office, and Exchange Server 2007 on November 30, 2006. Of course you can’t actually download and use the software yet--that comes at the end of January. But, I’m sure that many of you have participated in the beta testing program and are engaged in the many IT deployment/readiness activities Microsoft has orchestrated. It’s the best orchestrated product launch I’ve ever witnessed and the largest in Microsoft’s history.

Focused on a Single Customer Scenario: Migration

Not surprisingly, with 850 million computers running Windows and 450 million MS Office users around the world, Microsoft is fanatically focused on ease of migration--for end users and IT staff alike. The good news is that this product launch is the first one in my recollection that Microsoft has actually optimized and designed to support the Customer Scenario: “I want to migrate to this next-generation O/S to get my work done better.” So, Microsoft has identified customers’ moments of truth around migration and has worked hard to address them.

MICROSOFT (ORACLE) AND LINUX

We rarely write about Microsoft any more. Compared to Google, Microsoft has less and less effect on the business strategies of our corporate clients. Yet in the past two weeks, there has been a major sea change afoot that warrants commentary. Microsoft has apparently stopped seeing Linux as the enemy and realized that it’s time to co-opt Linux.

Linux is winning on the server. There’s no question about the fact that customers large and small want to mix and match Linux and MS boxes. Trying to fight against that customer tide wasn’t working. So Microsoft made peace with Novell (along with an infusion of $442 million) and is now promoting SUSE Linux and MS/Linux interoperability. Add to that news the fact that Oracle is now offering cut-rate prices for support of Red Hat’s Linux, and you have a major seismic shift afoot.

The Linux community is worried about fragmentation of Linux--two many variants promoted by too many strong parties. I don’t think these latest industry machinations are about fragmentation. I think they’re more about capitulation. Linux on the server is big business. It’s a business that Intel, Dell, HP, IBM, and Sun still hold dear. It’s a business that Microsoft can’t afford to lose to Oracle, Linux, Google, et al.

Tools for Lead Users to Use

OK. Mash ups are nice. But what’s next? Meg Lewis, one of my Pioneers and a veteran technology architect, asked me a question that reminded me to rekindle my search for end-user “development tools.” “Apart from Microsoft Access and Excel, what tools are there for business end users to use to develop multi-user analytical and database applications?”

GOOGLE: THE CAMEL’S NOSE IN BUSINESS SOFTWARE?

Our search and findability guru, Sue Aldrich, characterized Google’s latest enterprise software additions as the camel’s nose strategy. First, Google offered search appliances for the enterprise and the desktop to make it easy for employees to “Google” the information within their companies the way they use Google to find external resources. Then, Google offered consumer email, which many business people quickly adopted as an alternative personal email service. Now, Google is providing “Google Apps for Your Domain” which offers good-quality email with integrated calendaring, chat, VOIP and other features that will appeal to small businesses and to end users within large enterprises as well. Google Earth for the enterprise is picking up traction as more and more companies use the app for strategic applications from construction to oil exploration to logistics to environmental applications.

Google Checkout: Streamlining Customer Scenarios

ONE-STOP SHOPPING AT GOOGLE WITH GOOGLE CHECKOUT

Google Checkout may be the most profound strategic move that Google has made since its release of Google Earth. Google Earth was a “get it out, open it up, and see what happens” kind of offering from Google Labs. I suspect that even Google was surprised by how quickly Google Earth began attracting eclectic and creative mash ups.

Google Checkout, on the other hand, was clearly a very carefully thought-out strategic move. So far, so good, from the standpoint of merchants and buyers, judging from the discussions in Google’s online support forums.

What I like about Google Checkout as a Customer
From the customer’s point of view, Google Checkout appears to be a win. Our Customer Scenario® workshops show us that a huge percentage of “search, find, and buy” excursions begin at Google. Why not remove the friction? If I can find what I need from a merchant I trust on Google, I’m happy to click to buy, going right to the merchant’s checkout page. There I have the option of either using my stored credit card info on the merchant’s site (if it’s a merchant I already frequent), or of selecting Google Checkout to use my Google Checkout account. If I use Google Checkout, the merchant won’t see my full credit card information, nor will they receive my email address (unless I explicitly choose that option). The Google Checkout service will track the shipping status, alert me to problems, etc. through its API with the merchant.

While this is useful and reasonably painless for a one-time transaction, it becomes more irresistible for someone like me who is a frequent online shopper. I get the advantage of one-stop shopping, one-stop shipping status, etc. in one convenient location. As with Amazon and eBay, I can rate my experience with each merchant, so that others will know whether to expect any hiccups. I like the fact that Google promises not to share my personal information with anyone (although I realize that Google’s aggregated information will become hugely valuable to Google and its advertisers).