(As an aside, when I worked for Microsoft in the late-1990s, my team used to call the ever-crashing Outlook client, "Lookout!", which also happens to be the name of the punk rock record label in Berkeley where Green Day got their start... :)
Kristi Heim, SJ Mercury News, July 16, 2004 (the emphases below are mine):
Microsoft, the world's biggest software company, has thousands of programmers and billions of dollars to spend on developing search technology to compete with the likes of Google and Yahoo. But today, Microsoft is buying a key piece of search technology created by one guy in a Palo Alto guest house in his spare time, with help from his friend... Microsoft is acquiring Lookout, a two-man Silicon Valley company that offers a free, downloadable search engine for Microsoft's own Outlook e-mail software.My "Rifkin's observations":
MSN Director Lisa Gurry said Microsoft sees Lookout as ``strong technology'' that fits in with Microsoft's long-term vision for search. Lookout puts a search toolbar into Outlook that is similar to a Google search box. It lets users enter words into the box to find information within e-mail messages or in files on the computer, working much faster than Outlook's built-in tools.
Gurry said Microsoft will roll Lookout's technology into a new MSN search service that lets people find information in e-mails, desktop computer files and other locations besides the Internet.
It's part of a recent $100 million push by the software giant to beef up its search offerings. Earlier this month, the company streamlined the MSN Search page and offered a preview of search technology it plans to launch later this year.
The Lookout search engine was initially written by Eric Hahn, a former chief technology officer at Netscape who runs venture capital firm Inventures Group.
Hahn said he wanted to get back into programming, so when he wasn't busy at his ``day job,'' he started dabbling with ways to make Outlook more searchable. Last spring, he made an early version called ``Chrome'' available on the Internet as a free download. Thousands of people tested it and offered suggestions.
As the number of users grew, he needed help managing the project, so he called on his friend and fellow Netscape veteran Mike Belshe.
Hahn and Belshe worked on the project in a mother-in-law cottage next to Hahn's house, launching an improved search engine called Lookout early this year.
They never had any formal contact with Microsoft until an executive from the Redmond, Wash., company called them for a meeting in Mountain View this spring, Hahn said.
The product works with Outlook so well that it has won many fans among Microsoft employees, Gurry said.
Belshe is joining Microsoft's MSN Search team. Hahn said he will advise Microsoft during the transition.
Hahn and Belshe, who were planning to commercialize Lookout, agreed to sell the company to Microsoft under one condition: Existing users will be allowed to keep using the technology even though Microsoft plans to stop offering downloads of Lookout as of today.
They estimated the number of Lookout users at less than 100,000.
``It's such a useful tool,'' Hahn said. ``As an independent company we can get it to so many millions, but Microsoft can get it to everybody. We really felt having the Microsoft machine behind us was a huge advantage.''
- Lookout is one of the most promising of fifty startups working on Fishers. (Other promising ones include X1, dtSearch, and Bloomba.) Microsoft gets a little edge against Yahoo and Google in going after this space as a result.
- The division of Microsoft most interested in this is not Longhorn, Outlook, or Exchange. It's MSN Search -- the folks who are going head-to-head with Yahoo and Google. The most significant thing I speculate from this fact is that everyone who matters in Microsoft believes that the search functionality of the first Longhorn (now due in 2006 at earliest, and 2007 at likeliest) will be substandard, so MSN Search is taking on the weighty task of going after Yahoo and Google. My own belief is that we should expect nothing better than the "Windows Search Dog" from Longhorn until at earliest second-generation Longhorn, or 2010.
- Microsoft is buying this company for one guy, Mike Belshe. My speculation is that they're purchasing him more for his expertise in parsing .pst and .ost files (and other esoteric mail file formats) than for any other developing expertise he might have. (If two guys outside Microsoft could code the Lookout software in under a year, couldn't Microsoft just throw a dozen internal folks at the problem? Sure, but they probably would have gotten steep resistance in turf wars from the Outlook, Exchange, and Longhorn folks to fork over file formats -- which I'm guessing Belshe and Hahn probably spent extensive time grappling with and/or reverse engineering.)
- It took two guys and less than 100,000 downloads to make a big splash in the Fisher product category space. If Lookout is like Altavista, then there is still an opportunity for a couple of guys to create "the Google of this space". I've had several friends go on job interviews with Google, and their internal product codenamed Puffin doesn't sound like it has any strategic advantage over others in this space the way PageRank represented marketing (and possibly technical) advantage over other Web search services in the late 1990s.
- John Markoff, New York Times, May 18, 2004:
Edging closer to a direct confrontation with Microsoft, Google, the Web search engine, is preparing to introduce a powerful file and text software search tool for locating information stored on personal computers...
Improved technology for searching information stored on a PC will also be a crucial feature of Microsoft's long-delayed version of its Windows operating system called Longhorn. That version, which is not expected before 2006 at the earliest, will have a redesigned file system, making it possible to track and retrieve information in ways not currently possible with Windows software.
Google's move is in part a defensive one, because the company is concerned about Microsoft's ability to make searching on the Web as well as on a PC a central part of its operating system. By integrating more search functions into Windows, Microsoft could conceivably challenge Google the way it threatened, and destroyed, an earlier rival, Netscape, by incorporating Web browsing into the Windows 98 operating system...
Although Google's core business rests on huge farms of server computers that permit fast searching on the Internet, the company has already taken several steps to move beyond that business.
Last year, Google began testing a free program called the Google Deskbar that makes it possible to search the Web by entering words and phrases in a small dialog box placed in the Windows desktop taskbar at the bottom of the computer screen.
Google also sells a computer search system designed to index and retrieve information created and stored by a single organization.
There is a rich history of less-than-successful attempts to create information search tools for personal computers. In the 1980's, for example, Mitchell Kapor's On Technology developed On Location for retrieving information on Macintosh computers and Bill Gross, a prominent software developer, led a group of programmers to create Lotus Magellan for the PC.
Digital Equipment's Alta Vista search engine group also developed a search tool for data stored on desktop PC's. Today there are a number of commercial products for desktop searches like X1 and dtSearch. Moreover, both the Macintosh and Windows operating systems have file and text retrieval capabilities...
The Google software project, which is code-named Puffin and which will be available as a free download from Google's Web site, has been running internally at the company for about a year.
The project was started, in part, to prepare Google for competing with Windows Longhorn, which according to industry analysts will dispense with the need for a stand-alone browser.
The disappearance of the Web browser and the integration of both Web search and PC search into the Windows operating system could potentially marginalize Google's search engine. Google, well aware of this threat, hired a Microsoft product manager last year to oversee the Puffin project as part of its strategy to compete with Microsoft's incursion into its territory.
Microsoft has shown demonstrations of its new search technology, which emphasizes the use of natural language in queries like "Where are my vacation photos?" or "What is a firewall?" Microsoft believes that Longhorn users will no longer think about where information is stored; they will instead see a unified view of documents stored on both the Internet and on the desktop.
The looming confrontation between Microsoft and Google is coming as Microsoft prepares to introduce its own advanced Web search service, possibly later this year. The company is revising its MSN strategy and backing away from its Internet dial-up service, looking instead to get more revenue from the search advertising market that Google dominates.
Web and PC-based searching is a particularly thorny subject for Microsoft because the company's chairman, Bill Gates, first outlined the idea of "information at your fingertips" in a speech given at a computer industry trade show in 1990. Yet the company did little to innovate in the areas of Internet search or text and file searches on the PC until it discovered how profitable search had become for Google.
Google's strategy is to move quickly while Microsoft is still developing its Longhorn version of Windows, adding programs and services like its recently announced Gmail electronic mail program. The intent, say people who are aware of the company's strategy, is to lower its vulnerability to Microsoft by adding businesses that are "sticky" - in other words, businesses that create strong customer loyalty or are hard to switch away from.
Internet searching is widely seen by industry executives as a powerful commercial service, but one that is difficult to defend. It is widely presumed that Internet users who find a search service that is better than Google's will be willing to defect.
Searches for information stored on a PC, however, could offer an advertising arena that is more readily defensible. Indeed, desktop searching might be particularly valuable for Google's commercial advertisers, which may be willing to pay dearly for the ability to place targeted ads in front of personal computer users.
Such services, while they may be lucrative, will also inevitably force Google to deal with new controversies. Some privacy activists have opposed the Gmail service because they are concerned that the company is automatically extracting information from its customers' Gmail accounts.
- Stefanie Olsen, CNET, May 21, 2004
Google is reportedly preparing to release downloadable software that enables people to search for text and files stored on their computer's hard drive. The move would dramatically expand Google's search business beyond the Web while taking direct aim at Microsoft, which is itself getting ready to take on Google's dominance in Web search with its own technology.
Although Google would not confirm the existence of the project, called "Puffin," industry watchers have expected such a move for some time. Having announced plans last month for a $2.7 billion initial public offering of its stock, Google is accelerating efforts to increase revenue and expand into new markets on a number of fronts.
By broadening into desktop file search, Google would put two businesses to the test. First, it would expand its Web-search advertising -- its primary source of revenue, with sales of $914 million last year -- to an ad-supported application running on the desktop. That would put Google much closer to controversial companies such as Claria (formerly Gator) and WhenU, which have been caught up in a growing consumer backlash against "adware" and "spyware" products.
Second, Google would take what it's learned in building an enterprise search application and bring it to the masses. That's no easy task, considering that Google failed to storm the enterprise search market when it introduced the Google Search Appliance in September 2002. The product makes up a fraction of its business.
The Microsoft factor But desktop file search poses vastly different problems than Web search does, and the company could easily be trumped by operating system makers such as Microsoft, whose Windows software runs on more than 90 percent of the world's PCs.
Microsoft's OS dominance has been credited in the past with helping the software giant muscle into fresh territory by bundling new features in Windows--a key allegation the U.S. Department of Justice's antitrust suit, filed against the company in October 1997.
In a Securities and Exchange Commission filing announcing its IPO, Google flagged potential Microsoft tactics as a possible threat to its business on the Web. In an overview of risk factors facing the company, Google speculated that the software giant could one day seek to interfere with its ability to index certain kinds of documents on the Web.
Such concerns are even more pertinent when it comes to the desktop, where Microsoft holds powerful levers to promote its own products over those of rivals.
According to a report in The New York Times, Google will try to fulfill an unmet need among PC users for tools to easily find information across multiple applications on the hard drive -- searching through e-mail, text documents in various formats, music, and photos files, for example. Consumers would likely be the primary audience for such a tool, but it could easily infiltrate workplaces, too.
Apple Computer already offers an elegant tool built into Mac OS X to perform many of these tasks, but it only works on its own Macintosh line of computers, which account for less than 5 percent of the market. Although Microsoft includes desktop search software as part of Windows, it is unwieldy, and most users rely instead on self-managed file folders to organize their archives.
- A Yahoo article that is no longer available (damn you, Yahoo, how cheap is storage and yet you delete articles less than two months old):
"Microsoft is looking to protect the operating system and their control of the desktop. Everything Google does on the desktop is about protecting their Internet advertising," said David Thede, president of dtSearch Corp., which with Argo Technology powers the free Terra Lycos HotBot Desktop toolbar that allows users to search the Web, e-mail and PC files.
"I have yet to see a real clash of interests between Microsoft and Google," Thede said...
To effectively challenge Google on the Web search and advertising fronts, Microsoft would have to match Google's massive infrastructure that is widely believed to include more than 100,000 servers -- an investment analysts said it may or may not choose to make.
Industry players said a move into desktop search would be an intelligent and natural extension of Google's business, but not without challenges -- chief among them being how to make money from the effort.
Most providers of desktop search, including X1 and dtSearch, focus on corporate users who are used to paying around $100 to $300 for software. Scores of other software makers are in the business of providing tools to quickly locate information on PCs, and the landscape is littered with the corpses of companies that have failed.
Google users are accustomed to getting free services in exchange for ads. While Web-search advertising has been a home run for Google, its Gmail product that delivers ads based on the content in e-mail has sparked a storm of protests from privacy advocates and may not be as lucrative.
- Stefanie Olsen, CNET, June 8, 2004:
AltaVista, now owned by Yahoo, was among the first to take a stab at desktop search, but its product failed to catch on. Since then, a slew of companies have developed downloadable software applications to address the problem, including Copernic, Groxis, Enfish, 8020 and X1 Technologies. None have gathered critical mass.
Research firm IDC has estimated that sales of software for search represented a $617 million market in 2003.
"It's a tough market, lots of companies have come and gone," said Andrew Feit, a senior vice president of marketing for corporate search technology provider Verity.
Although Google has mainly avoided controversy over its Web search ads, it runs the risk of alienating consumers if it misplays its hand in a downloadable application that aims to sort through private material, critics say.
Adware companies such as Claria and WhenU are trotting out new desktop applications to appeal to consumers and support their ad businesses. Claria and WhenU began by bundling their advertising software with other popular file-sharing applications so they could increase the number of people they might track for ad purposes. These companies monitor people as they surf the Web and send targeted ads based on their behavior. The practices have landed them and many others in court, where they have argued for their right to deliver ads to the Web sites of their customers' rivals.
In a sign of growing overlap between Web search advertising and ad-supported desktop tools, Yahoo's Overture subsidiary has struck a deal to display tiny text advertisements through Claria and WhenU.
State and federal governments are now interested in regulating and perhaps even banning adware and its more controversial cousin, spyware. Utah has already enacted such a law, and the U.S. House of Representatives and the Federal Trade Commission have convened hearings on the issue in the last few weeks.
Google may be backing self-regulation in advance of widespread laws. This week, the company released a set of suggested principles for software makers to follow when writing programs that embed themselves on Internet users' PCs. The guidelines propose that an application should follow simple rules of politeness: It should admit what it's doing, permit itself to be disabled and not do sneaky things like leak personal information.
Yet even if it applies such best practices, Google could still land in hot water. Given that the company already has access to information about people's search histories and Web surfing behavior and will do so about their e-mail communications through its upcoming Gmail service, Google could take heat from privacy advocates and consumers.
The company already makes the Google Toolbar, Deskbar and other products for Windows that transmit some information about Web surfing behavior back to its servers. Under proposed laws, these tools could be regulated, as would its upcoming ad-supported desktop search software.
"What's happened is that there's a trend of going from search to publishers to the desktop. After looking at the beginning of that market with Claria, the question is: How do you make it a consumer experience that they not only want, but also aren't offended by?" Highland's DeSilva said.
Those concerns over embedded software are unlikely to affect Microsoft, whose upcoming integrated search tools will probably be kept free from advertising.
Software challenges Google also faces considerable hurdles in the technology side of desktop search.
"So many people equate search with Google, but in fact, there's an entirely different market for enterprise search software. And it is a complex problem to solve," said Sue Feldman, a vice president of content technologies research for IDC.
Google introduced an application for searching corporate intranets and desktop files two years ago. But the software makes up less than 5 percent of the company's business, or less than $48 million last year, according to the company's IPO filing. While Google has a couple hundred enterprise customers, it hasn't been as successful in that sector as it has in search and advertising.
Google has become popular because it's helped to improve Web search by delivering fast, relevant results. But its formulas for the Web that rely on the link structure of Web pages are unlikely to translate well to the PC environment, as files and documents on the PC don't contain an inherent link structure.
One answer is to embed a common "sticky" note to applications and documents that would let people label these with a few keywords. That would make it easier to retrieve the files down the road. Application makers such as Adobe Systems and OS makers such as Microsoft are in a prime position to develop such tools.
Another approach, now under development by Microsoft, is to create intelligent documents with XML (Extensible Markup Language) links. These would enable people to input information into one document and funnel that data to other, relevant applications. Search tools would be built in, so related information could be found in disparate applications.
Autonomy, Convera and Verity are all companies that are working to solve these enterprise search problems and typically offer much more robust technology than Google's enterprise technology. Google's system tends to focus on simplicity and works particularly well with HTML-based documents.
"Google's real challenge will be in adoption: getting people to download and install it," independent analyst Matthew Berk said. "In order to search your hard drive, you need to install something that's pretty intrusive, that can reach deep down into your machine."