Buying Content Management

Microsoft's $36 million acquisition of NCompass Labs last week fills the gap in company's lineup.

Microsoft Corp.s $36 million acquisition of NCompass Labs Inc. last week adds a powerful player to the growing content management field.

The industry is already a crowded one, including the likes of Vignette Corp., Interwoven Inc. and dozens of others. The cash deal is expected to close at the end of this month, officials said. NCompass is a privately held company based in Vancouver, British Columbia, with about 160 employees.

Users of the NCompass Resolution content management system welcomed news of the deal.

"For us, it will make life easier," said Walker Jacobs, publisher of Institutional Investor magazine, in New York. "Were a Microsoft shop, and NCompass was one of the few non-Microsoft products weve been using."

Jacobs questioned whether the pricing model will change. The lower price of NCompass compared with other content management vendors was a big factor in the magazines decision to use NCompass.

Also looking favorably on the deal is Bill Hunter, manager of content management systems for Cable & Wireless plc., in Vienna, Va. "We have an alliance of sorts with Microsoft and use a number of its products. This will allow us to strengthen and solidify the architecture for the intranets, extranets and the Internet that were currently using."

Hunter said it makes sense for Microsoft to seek a foothold in the content management arena. "Content management systems is an area that is going to grow tremendously over the next couple of years," Hunter said.

Other vendors said they werent daunted by the acquisition, despite Microsofts power and influence.

"Everybody knows for a fact that content management is in the top three things every enterprise in the world needs to purchase," said Leif Pedersen, vice president of products for Vignette, in Austin, Texas. "Its a natural move for Microsoft. They need to expand the footprint of their Office products."

Microsoft officials said customers drove them to seek a content management solution to acquire. "For Web content management, we really havent had any solution in the past, other than solutions delivered through partners like NCompass," said Barry Goffe, group manager of Microsofts .Net enterprise solutions, in Redmond, Wash. "Weve had a lot of interest from customers and a lot of direct requests from customers for a solution from Microsoft."

Gerri Sinclair, president and CEO of NCompass, said the deal will marry NCompass technology with Microsofts additional technical expertise as well as its global reach and deep financial resources. "Its all going to result in better e-business solutions for our customers," Sinclair said.

While Sinclair said most NCompass employees will join Microsoft, some employees privately disputed that. One midlevel NCompass executive, who asked not to be named, said the majority of employees brought to Redmond for interviews were told there was no place for them at Microsoft.