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Friday, July 16, 2004 - Page updated at 12:00 A.M.
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MSN adds to search tools by snapping up Lookout

By Kim Peterson
Seattle Times technology reporter

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MSN said yesterday that it has acquired Lookout, a Silicon Valley startup that made a name for itself with software that quickly searches files within Microsoft's Outlook e-mail system.

The acquisition is part of an effort at Microsoft to develop broad, powerful search tools for MSN and other core products. As simple as it may seem, search is a technologically daunting task, and it has become one of the hottest areas in technology for Microsoft and its rivals.

MSN has been developing its search technology for nearly a year, and Lookout is the first company it has bought to supplement that work. The companies would not disclose the financial terms of the deal.

Microsoft often assigns code names to companies it is considering buying, and Lookout was referred to internally as "Binoculars." MSN didn't say what it plans to do with the new technology, but "binoculars" suggests Lookout could become part of a comprehensive search tool in development at MSN that scans across a computer's files.

MSN revamped its Web search site earlier this month, but still uses a system owned by rival Yahoo! to run the search engine. It is developing its own Web search engine, which it says it will release within the next year along with other search tools.

Palo Alto, Calif.-based Lookout doesn't actually sell a product yet, and has only two employees, Eric Hahn and Mike Belshe. It started out as a hobby for Hahn, a developer who started Collabra Software, an e-mail software company that was bought by Netscape Communications in 1995. Hahn also runs a venture capital company called Inventures Group.

Eventually, Hahn decided that his hobby had some potential as an actual product. He and Belshe founded Lookout in January and made the program available free on its Web site, at www.lookoutsoft.com.

Lookout has been lauded by critics as a better way to search Outlook than Microsoft's search tools. Belshe said that thousands of people are using the software and hundreds more download it daily, even though the company spends no money advertising it.

"It's been phenomenal," he said. "It just picked up like wildfire."

Belshe will become a full-time MSN employee in the company's Mountain View, Calif., offices. Hahn will work with MSN's search team during the transition, but will not permanently join the company.

Belshe said he and Hahn decided to sell the company because Microsoft will do more with the technology than they could. For example, Belshe said, he didn't have the resources to make Lookout available in other languages, and Microsoft does.
 
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"With Microsoft, we can take this a lot further than we could by ourselves," he said. "This is just the tip of the iceberg."

Susan Feldman, an analyst at IDC tracking the search business, said the acquisition puts MSN where it needs to be in terms of becoming a leader in computer desktop search.

Search is not an easy problem to solve, she said, and there is a lot of interest right now in software that can search computer files more efficiently than what is available today.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

Copyright © 2004 The Seattle Times Company

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