Enterprise search is becoming the latest battleground among software giants after Microsoft agreed a $1.2bn purchase of Norwegian specialist Fast Search & Transfer. The deal adds to a recent shake-up in the sector and strengthens the case of the world’s biggest software company.

Alan Pelz-Sharpe of analyst CMS Watch argued that the combination gives Microsoft equivalence with its traditional rivals. “This puts Microsoft on a par with IBM, Oracle and, arguably, Google,” he said.

The deal will not be done until Fast shareholders approve it, and some watchers believe there is scope for a counter-offer. The usual suspects of IBM and Oracle would be the obvious candidates, although EMC, Google and HP could also feature in a bidding war. Whether Microsoft or another competitor gets Fast, however, the state of flux that has characterised the sector recently is likely to persist for some time yet.

Internet search may make more headlines but enterprise search is also hot. In late 2006, IBM and Yahoo launched a free search product, OmniFind Yahoo Edition, and that was followed late in 2007 by Microsoft’s launch of Search Server 2008 Express, another free product. Meanwhile, a leader in the search sector, Cambridge-based Autonomy, last year agreed to buy archiving and legal discovery firm Zantaz.

The underlying reason for recent activity in business search is the spate of changes to rules and regulations that affect firms’ governance obligations. The ability to truffle out digital assets from the nooks and crannies of organisations is prized today because requirements to discover information in a timely manner can be the difference between defeat and victory in a legal case, or in satisfying and not satisfying a regulatory code. On top of this, search vendors say their products also serve underlying business processes.

“[Enterprise search] is for workers tomorrow what internet search is for consumers today ­ an indispensable tool that helps them quickly find the information they need,” said Jeff Raikes, president of Microsoft’s business division.

The increasingly competitive nature of enterprise search could spark more consolidation. Shares in UK-founded Autonomy jumped on the Microsoft-Fast announcement amid suggestions that it could be the next to be bought. However, Autonomy said it views the Microsoft-Fast deal as an opportunity.

“When Google entered the enterprise keyword search market, it created tremendous visibility for search,” said Autonomy chief Mike Lynch. “Microsoft’s announcement places it ahead of Google in terms of keyword search and is likely to create similar market buzz and up-sell opportunities for Autonomy.”

Ovum analyst Mike Davis said that privately-held Endeca is another company that could be attractive.

According to Microsoft’s Raikes, Fast has “the best technology out there” but the deal raises significant questions about the future of Search Server, a family of products still in testing and not due for first commercial release until later this year.
What is indisputable, however, is that enterprise search is emerging out of the shadows of the attention on internet search.