divine Acquires Northern Light, Announces Premium Content Agreement with Yahoo!
Paula J. Hane
Posted On January 28, 2002
Just 2 weeks after Northern Light announced it was refining its business focus and discontinuing free Web searching at northernlight.com (see the January 14 NewsBreak at http://newsbreaks.infotoday.com/nbreader.asp?ArticleID=17271), it has been acquired by Chicago-based divine, Inc. (http://www.divine.com), a provider of integrated solutions to the enterprise market. divine purchased Northern Light's enterprise search technology, e-commerce transaction engine, and premium content services in an all-stock transaction. Terms of the deal were not disclosed. One day later, divine and Yahoo!, Inc. announced an agreement to jointly offer divine/Northern Light premium content to Yahoo! searchers.
In a conference call with press and industry analysts, divine CEO Andrew "Flip" Filipowski stressed the many advantages and synergies to be gained from the Northern Light acquisition. He said that Northern Light "filled in a strategic gap in our product line. This combination of divine's existing content management and content aggregation solutions and Northern Light's vast collection of premium content offerings enable divine to offer information-rich solutions for portals, intranets, Web sites, and extranets, helping our customers gain a competitive edge."
Filipowski also pointed to the superiority of the Northern Light enterprise search technology and its taxonomy and automated categorization. He said his company has already begun replacing Verity and Autonomy implementations within the divine product line with Northern Light's technology.
divine has been almost continuously in the news in the past year and a half, with one acquisition after another. Probably best known to folks in the library and information industries is RoweCom, a company that divine purchased last summer. It also acquired Sagemaker (enterprise portal software) as well as Open Market and Eprise (both content management software companies). Filipowski founded divine in 1999; the company went public in 2000.
divine offers "extended enterprise solutions" in three areas: professional services (such as customer relationship management, business systems, and technology infrastructure), software services (collaboration, content management, and library acquisition and collection management), and managed services (managed hosting). The company focuses on Global 5000 and high-growth middle-market firms, government agencies, and educational institutions. It currently serves over 20,000 customers.
Northern Light Likes divine Intervention
Northern Light's attraction to divine is obvious: access to all those enterprise customers. Before its acquisition by divine it only had about 150 enterprise accounts. Northern Light CEO David Seuss calls this a terrific deal, since the hardest thing for a company to do is acquire a customer. Northern Light only had a sales force of 15 employees; divine has 300. Seuss said, "Not only do divine's existing technologies and solutions perfectly complement Northern Light, but its powerful distribution channel can bring the benefits of our integrated search and content technologies to a much wider audience around the world."
Seuss, Northern Light chief technology officer Marc Krellenstein, and senior vice president of content development Robert Nelson all join divine in senior positions. Gregory Whitten, who was chief software architect of computer languages and office applications during his 19-year career at Microsoft Corp. and is a primary investor in Northern Light, will serve as a technology advisor to divine. About 80 percent of Northern Light's 171 employees will join divine, moving to a divine office facility in Burlington, Massachusetts.
Given the recent adjustments that Northern Light made to its business model—i.e., getting out of the free-Web-search drain on resources—the acquisition came as no surprise. It had, in fact, been rumored for some time. The transaction looks to be a win-win situation for both companies and for enterprise customers. It also strengthens divine's move into providing content with its earlier purchases of RoweCom and Sagemaker.
"Merging content with the technologies that find and manage it is a logical next step in the development of content-related applications," said Susan Feldman, IDC's director of content and retrieval software research. "In the past year, divine has acquired content management vendors such as Eprise and Open Market, and information aggregators such as RoweCom and Sagemaker. Search was the missing piece. By closely integrating search and content management with a collection of high-quality information sources, divine offers enterprises a single point of entry into both their internal information sources and the external ones that are strategically necessary to their survival. Integrated solutions enable an enterprise to develop an integrated information strategy based on the particular needs and processes of their organization. Work flow, categorization, tagging, publishing, search, and information analysis can now become one seamless process that builds a strong foundation for knowledge work. divine now has a strong offering that will make other content-related software vendors and content aggregators sit up and take notice."
The Yahoo! Deal
The deal with Yahoo! makes the divine/Northern Light Special Collection available for purchase by consumers on Yahoo! sites. The Yahoo! Premium Document Search (http://premium.search.yahoo.com) provides access to the more than 7,100 sources in the divine/Northern Light Special Collection. The Current News that's available in real time for free on northernlight.com is not added to the archive on Yahoo! until 1 day later.
Consumers can view free summaries of documents based on their search results prior to purchase, with a money-back guarantee. Documents can be bought individually, with prices depending on the document and ranging usually between $1 and $4, or through a subscription for access to up to 50 documents for $4.95 per month. Not all 7,100 sources are offered through subscription, however; Yahoo! provides a list of the "qualifying" sources. Yahoo! Premium Document Search is available now on all Yahoo! Search (http://search.yahoo.com) results pages. In addition, the service will be integrated within the Yahoo! network and available through Yahoo! Finance (http://finance.yahoo.com) and Yahoo! News (http://news.yahoo.com). According to Seuss, just 1 day after the official debut on Yahoo!, Northern Light's volume was already up 30 times higher than it was with just the northernlight.com site. Seuss indicated that a subscription option will also be added to northernlight.com.
While some might question how divine can continue to acquire and assimilate companies (some with competing technologies, so it's not a small task) and hope to achieve any profitability within the current depressed business climate, Filipowski stressed that the company is optimistic about its success. Companies are still acquiring collaboration and content management tools, even during bad times. He said that divine is showing "leadership and gumption" in taking aggressive moves to build the company during scary economic times, instead of just hiding and waiting for good times to return. He admitted that it will be a challenging year but that divine is now well-positioned to build value. The company expects $800 to $900 million in revenue this year and $1 billion by 2003. It hopes to reach profitability across all areas of its business by the middle of this year. Maybe they really do have some "divine solutions"?