Microsoft Joins the Powerset

[Editor's Note: This is the 5,000th Microsoft Watch post]

There has been talk about a Plan B ever since Microsoft withdrew its unsolicited offer for Yahoo about two months ago. Powerset is a good buy for Microsoft, but by no means Plan B for catching Google. That said, it's a helluva acquisition with long-term promise because of the Powerset team.

Microsoft officially announced acquisition of Powerset today. I kind of laughed reading the blog post, thinking back to an e-mail I got from Powerset last week about its new search product for Wikipedia and why it would be great for iPhone. Right, like I'll be getting any more iPhone-loving e-mail from Powerset now that Microsoft has come a calling.

Powerset is an important acquisition for Microsoft because it represents the Holy Grail of search long touted by CEO Steve Ballmer and Live Search executives: Natural language search. For years, Microsoft execs have taken the position that search is still in its infancy, even while Google gobbled up search share—now over 60 percent, according to ComScore. The theory: Keywords suck. People want to ask questions.

There's something to that asking questions stuff being a more natural way of looking for information. Keyword search is more than a means to an end, it's how Google makes money—surely Microsoft would like to tweak the business model as much as improve searches. (I'm being a wee bit facetious, as Powerset displays Google search keywords with its results; surely that will be one of the first changes Microsoft makes. Can you say Live Search keywords?)

Powerset is a hot startup, focusing on natural language search and with the new Wikipedia search feature little more than a month in market. As a Powertest test, I typed: "What are the five continents?" It's kind of a trick questions. Where I grew up, teachers taught about seven continents, but schools in some other countries use a smaller number. I got a surprising answer and learned something I should have known (shame on me): That the Olympic rings stand for the five inhabited continents. Way to go Powerset and Wikipedia.

Powerset puts the Wikipedia information in its own page with the aforementioned contextual ad keywords. There's definitely a business model here.

In announcing the acquisition, Satya Nadella, Microsoft's senior veep for Search, Portal, and Advertising, blogged:

"Problems exist because search engines today primarily match words in a search to words on a Web page. We can solve these problems by working to understand the intent behind each search and the concepts and meaning embedded in a Web page. Doing so, we can innovate in the quality of the search results, in the flexibility with which searchers can phrase their queries, and in the search user experience. We will use knowledge extracted from Web pages to improve the result descriptions and provide new tools to help customers search better."

Satya may be right, but this is an old song. Microsoft has sung so often about natural search, without reaching crescendo. Google may be unbeatable by the time there is a competitive solution from Microsoft. I look at Powerset as Microsoft's last chance to get natural search right, if it's not already too late. Windows long ago showed that better isn't necessary to be market leader, just good enough. Are keywords good enough? Maybe, if most everyone uses Google from their PCs (But Google isn't everywhere, as I will explain in the last paragraph of this post).

"Powerset will join our core Search Relevance team, remaining intact in San Francisco," Satya wrote. "More importantly, Powerset brings to Live Search a set of talented engineers and computational linguists in downtown San Francisco. This is a great team with a wide range of experience from other search engines and research organizations like PARC (formerly Xerox PARC)."

Remember Xerox PARC and the engineers who really developed the graphical user interface and mouse? PARC also is credited with WYSIWYG editing and the laser printer, among other inventions. So there is a certain esteem attached to any company remotely affiliated with PARC.

Microsoft picks up an impressive team of technologists with Powerset—perhaps the acquisition's most valuable asset:

• Barney Pell, co-founder and CTO, worked for NASA and has a doctorate from Cambridge
• Lorenzo Thione, co-founder and director of natural language technologies, is an expert in computational linguistics
• Scott Prevost, general manger, has expertise in voice and facial natural user interfaces
• Ron Kaplan, chief science officer, was chief scientist for PARC spin-off Microlytics and is another expert with natural language technologies
• Chad Walters, search architect, is Yahoo's former Websearch architect
• Tim Converse, director of ranking and metrics, is another former Yahoo, leading the webspam algorithms team there.

The list isn't exclusive, just the people identified by Satya's blog post. They're an impressive collection of natural user interface experts and visionaries who are coming to a company that desperately needs to rediscover its technical heritage and leadership.

Most importantly, they have expertise in areas of search that could be applied in areas where Google hasn't yet conquered. Maybe that's the endgame Microsoft can win. The mobile phone is the next big search platform, the one that will by comparison dwarf PCs. There's a reason why last week I got a Powerset PR pitch about iPhone.

Who will really want to type in keywords on a cell phone? That's going to be no way to search. Speak search? Oh, yeah. Natural language search makes a helluva lot of sense on cell phones. And Microsoft just added a hell of a crew to its Live Search core Search Relevance team.