What can the plan be with Microsoft's purchase of hot startup Powerset? The 3-year old company, founded by Dr Barney Pell, recently launched a semantic search experience for Wikipedia.
It is doubtful that Microsoft bought the company just to enhance Live Search. Possibly the plan is to replicate the Wikipedia solution, then incorporate Powerset into Internet Explorer. In this post we look at what the thinking behind the acquisition might be.
Most initial reviews found the Powerset product release underwhelming. Critics appreciated the innovative semantic UI and recognized its potential, but believed it didn't vastly improve Wikipedia. So in view of the lukewarm reviews, the acquisition by Microsoft was unexpected. The 100M price tag is around 5x the 12M Series A + 8M investment put into the company. Microsoft execs must believe Powerset can be a weapon in its battle with Google.
Given a set of unstructured information, Powerset applies Natural Language Processing techniques to extract concepts and the key semantic concepts out of the text. It then builds a semantic index (similar to Google's) as well as a conceptual graph of relationships between entities. This graph is typically expressed in RDF triples.
One of the Powerset innovations is surfacing of semantics to the user interface. The contextual gadget is overlaid to help navigate the unstructured information.
Many thought Powerset to be a generic semantic search engine, but its first product is limited to Wikipedia. It is not trivial to scale the technology to the entire web.
When semantic technologies emerged a few years ago, people started talking about how semantic web and/or semantic search might be a Google killer. The talk was supported by logic that semantic search can deliver more relevant results because it "knows" the content.
Industry realizes that isn't the case. Semantic search has no huge advantage over the statistical approach used by Google. We discussed this in the post Semantic Search - Myth and Reality.
What is powerful about Powerset? Precisely that it doesn't try to search the web as a whole. Right now, the solution works on Wikipedia, but the infrastructure is generic, so any other site could also be enhanced. The contextual outline developed can be used to navigate any content.
Instead of dealing with the whole web, the idea may be firstly to build solutions for specific sites.
Powerset as it is today is no Google killer. At this point only something with huge traction and momentum would stand a chance.
In the search market, Google has a strong hold - potentially stronger if the Yahoo deal goes through. People are conditioned to Google: it's simple and, yes, imperfect, but it's good enough and the results are still better than Live Search.
If Microsoft bought Powerset with the goal to incorporate it into Live Search, then it's likely to be another acquisition to make little impact on the bottom line. In fact, the announcement on the Live Search blog states just that. The number one reason is acquiring talent; the second is the belief that NLP and semantic algorithms will be able to patch holes in today's search.
Today Powerset brings only interesting technology; it doesn't bring traction. So what were they thinking up in Redmond? There may be more subtle play, leveraging the fact Powerset works well on knowledge sets like Wikipedia.
Possibly Microsoft plans to deploy Powerset across its own sites, then perhaps incorporate Powerset into Internet Explorer.
Imagine going to Wikipedia and having a semantic overlay on each page. Now imagine scaling this experience across major information sources around the web.
Providing contextual, semantic experience allows Microsoft to retain eyes longer, shaving off the time people spend searching Google.
This is an important point because Google doesn't make money on search - it makes money on advertising.
The real problem Microsoft is seeking to solve is advertising. Until now the web has figured out two fundamentals for advertising - portals and search.
Portals show ads on each page; the more people browse the content, the more ads are shown and the more money is made. The search model emerged as an alternative, now more successful, path to advertising dollars.
With Powerset and other semantic technologies, there's another model: contextual information exploration overlaid on existing content.
If Microsoft can figure how to keep eyes off Google's home page, the game will shift dramatically. The browser is one of Microsoft's most powerful tools - and the default box is Live Search.
If Microsoft wants to win over advertisers, it might just do more with the browser. Incorporating aspects of Powerset's semantic navigator into the browser by default could be a game changer. This is not a straightforward play. A large company with bureaucracy and execution problems is unlikely to be able to merge semantics into the browser quickly and elegantly.
The Powerset acquisition is an interesting move by Microsoft. This hot semantic startup was on everyone's radar.
What can the plan be? It is doubtful that Microsoft bought the company just to enhance Live Search. Possibly the plan is to replicate the Wikipedia solution, then incorporate Powerset into Internet Explorer.
That is a bold play requiring exact execution - not the kind Redmond has shown lately.
What do you think Microsoft is going to do with Powerset? What are the other applications of this technology that you can think of?
Comments
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On that last image, I think Google should be the one on top :-)
Posted by: Richard MacManus
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July 3, 2008 1:57 AM
"The Powerset acquisition is an interesting move by Microsoft. This hot semantic startup was on everyone's radar" should read "The Powerset acquisition is an interesting move by Microsoft. This hyped semantic startup was on everyone's dead pool radar."
More junk bought by Microsoft. Hope that their new bag of crap doesn't include Barney Pell. He would make the deal crappier. The guy seems to be nothing more than hot air. Ditto for Powerset in general. A good idea, crappy execution.
Posted by: A Powerset Detractor | July 3, 2008 2:07 AM
There is another possible angle - enterprise search. Microsoft is strong in the enterprise; Google isn't (yet?) Google Search Appliance is a trojan horse for Google getting into the enterprise. If Microsoft could offer a significantly better "enterprise intranet search", it helps to keep Google out.
Posted by: Sam Denby | July 3, 2008 2:31 AM
I guess that this battle will continue for a while. And after Bill Gates went on public saying that the Internet is just a fad, Microsoft is now desperately trying to invest in some sort of internet gateway (see also my investment blog here- http://www.doitinvest.com/?p=16). So I guess we will se if this acquisition was inspired or not later...
Posted by: RaduH | July 3, 2008 3:38 AM
Nice to see that PowerSet has Google ads. LoL.
Posted by: mikael bergkvist | July 3, 2008 3:56 AM
This could end up in exchange and outlook. I'd like to think that maybe this could end up in games too, Imagine it being used with text to speech and be able to converse with a game character.
Posted by: Darren | July 3, 2008 4:32 AM
Microsoft plus nothing beats Gaggle! How much more so these peopl plus us then!
Puhlease ask serious questions from now on!
Posted by: steveballmer | July 3, 2008 4:41 AM
What a shame Powerset was gobbled up before realizing it's full potential. Silly to think Microsoft is one upping Google with this purchase.
Posted by: Robert MacEwan | July 3, 2008 5:03 AM
Don't you see how rubbish is PowerSet?
Posted by: Mojacve | July 3, 2008 6:34 AM
I think the idea about the browser is an interesting one, and I also liked: "Google doesn't make money on search - it makes money on advertising."
So maybe MS has a different plan, and do not want to beat Google in the search playing field, but he is thinking about opening a completely different field. Interesting thoughts!
Posted by: Endre Jofoldi | July 3, 2008 7:09 AM
Wake Up Microsoft!! your a software company, and not a very good one at that, lately. how well do you really think ppl will take to having to download security patches every other day for your new fangle dangle advertising schema?
Google is on top because they built something that works. period. micorsoft hasnt built anything that worked out of the box no questions asked since dos..... they rush jobs in an effort to get them in ppls faces faster, then drop them if they suck( see win ME and soon vista)
dont let the aquisition of an indexing software firm scare you google, if anything it will push more ppl to you as microsoft blunders yet another project.
Posted by: maninthebox | July 3, 2008 7:14 AM
after searching on powerset i find that they are currently not integrated them self into live search
and they only searching wikipedia
Posted by: ajay pathak | July 3, 2008 7:43 AM
Alex said...
It is doubtful that Microsoft bought the company just to enhance Live Search.
I think that Microsoft had that in mind when they were looking at Powerset's technology to acquire, ie, some technology to enhance Live Search. I don't think that Powerset will replace the existing Live Search's Block-Level-Link-Analysis (BLLA) algorithm for web search, but perhaps use it as a secondary engine to refine the retrieval result of primary engine (BLLA), I don't know, just guessing.
An advanced version of BLLA is believed to be the working horse of Live Search, which was not published in peer review journals. This is understandable because you lose your commercial advantage by publishing every bit of research you do. From the BLLA algorithm described above, it showed in the test that it outperformed Google PageRank in terms of precision & recall search retrieval capability. This means BLLA was superior to PageRank, but this was year 2004/2005 and I am sure that Google & Microsoft had moved on from then. The paper is a peer reviewed paper ,which means you can't make up false claim, since any researcher from around the world who read & implement the algorithm described the paper can do so and test the claim. But this shows one thing, Microsoft is not that far behind Google. I think Microsoft's problem is not of technology but branding, ie, if they improve Live Search retrieval capability dramatically, people wouldn't migrate from Google on a large scale.
Natural language search (symbolic) cannot be combined with numeric-based search as BLLA into one framework. They can work hand in hand independently in one framework, but can't work as one unit, because these 2 technologies are incompatible. This is why NLP search & numeric search are so hard to be developed (the universal search engine), because of their vast incompatibilities. Technology evolves and may be some days, researchers will be able to figure out a way to overcome this difficulty.
Posted by: Falafulu Fisi | July 3, 2008 9:50 AM
If they can get Powerset to do more than search Wikipedia and do it a hell of a lot faster than it is now? Hell yes.
Posted by: Cyndy
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July 3, 2008 10:09 AM
Well, I agree to you, Alex, it is not about enhancing Live Search. It is mainly about a grand strategy of acquiring Yahoo to compete with Google.
My analysis is at here: The Secret behind Powerset Acquisition.
Yihong
Posted by: Yihong Ding | July 3, 2008 10:51 AM
I'm interested to see if Powerset can scale and actually search the entire web instead of one site.
Posted by: hawaii vacations | July 3, 2008 4:01 PM
Google will always have the largest scope of all information. MS just doesn't get it. For instance, MS recently stopped their book search/scanning project. And they don't index nearly the same amount of data per site. They don't care about comprehensiveness.
Most data = ability to find rare things buried deep = more users = more analysis = better results. Google already has top NLP experts working for them, equal to and beyond anything Powerset could do. So MS is going nowhere "Fast" because they're simple not committed to *all* of the world's information like Google is.
Posted by: Zx | July 3, 2008 4:21 PM
Along the lines of the Wikipedia-only implementation (with wiki's highly structured data set), Microsoft should immediately look at the following:
Powerset + MSDN/Technet/other MS knowledgebases...
Do it. Just do it. Now.
Beyond that, the underlying query technology could also be used to deliver more relevant ads to the user, regardless if it's used to substantially change the main search engine.
Posted by: Sri | July 3, 2008 4:38 PM
Powerset was smart to sell now. Another company is about to emerge that will define semantic web with crystal clarity. The Powerset boys know this.
Posted by: balloonRide | July 3, 2008 5:01 PM
"Beat Google": Trying to call some attention here.
Posted by: RM | July 4, 2008 12:24 AM
How about this,
Microsoft + Powerset + Yahoo > Google ??
Posted by: Jigar Mehta
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July 5, 2008 10:00 PM