IBM press release: 

IBM and Yahoo! Inc. today introduced new, free enterprise search software with Web search services powered by Yahoo! that enables departments and businesses of all sizes to quickly and easily find, access and capitalize on information stored within organizations and across the Web.

IBM OmniFind Yahoo! Edition is a no-cost, entry level enterprise search product developed to help eliminate financial and technology barriers to intranet and Web search. Unlike other enterprise search solutions that can cost thousands of dollars to purchase and implement, the new offering from IBM with Web search services powered by Yahoo! can be downloaded for free and is simple to install and use with existing hardware.

"Together, IBM and Yahoo! are delivering on the promise of making information easier to find, use and share while providing a better search experience for users," said Eckart Walther, vice president of product management for Yahoo! Search. "This is a valuable tool for helping organizations improve employee productivity by enabling them to more quickly find needed information. By empowering customers and partners to quickly find information on the Web, we're also able to reduce their support costs."

This announcement supports IBM's company-wide Information on Demand strategy aimed at helping clients of all sizes unblock the barriers to using information as a strategic asset. By enabling organizations to more easily take advantage of enterprise and Web search, IBM and Yahoo! are helping organizations improve access to information, gain new business insight, and create new opportunities for the use of information no matter where it is found.
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With support for up to 500,000 documents per server, more than 200 file types and documents in more than 30 languages, IBM OmniFind Yahoo! Edition offers a unique combination of simplicity, openness, and functionality. It features a three-click installation process and takes customers only minutes to go from download to live search and information access. IBM OmniFind Yahoo! Edition also uses the open source Lucene indexing library to provide cross-platform full text indexing.

IBM OmniFind Yahoo! Edition offers advanced features such as automatic spell correction, support for synonyms and shortcuts, wildcard support to substitute for unknown characters, query reporting, and graphical user interface customization. In addition, it is fully integrated with Yahoo! Search, providing one-click access to send queries to Yahoo! web, image, video, audio, directory, local and news search services.

Some analysis from the AP:

IBM hopes the service, being announced Wednesday, bolsters its overall efforts to improve its dealings with small companies.

More broadly, though, Yahoo and IBM expect their partnership to shake up the field of "enterprise search," in which leading providers such as Google, Autonomy Corp. and Norway-based FAST are seeing forays from business software giants such as Microsoft Corp., Oracle Corp. and SAP AG.

Google has been dominant at the lower end of the market selling "search appliances" that begin at $2,000 and range up to $30,000. The top-of-the-line version can comb through 500,000 documents. Not coincidentally, that is the same limit that IBM and Yahoo have set for their free software — although Google's product includes hardware that operates the search service.

"They're going to create a real headache for Google at that tier," said Forrester Research analyst Matthew Brown.

Of course, whatever pain Google feels ought to be put in context — it gets 99 percent of its revenue from advertising, not from selling search appliances.

Well, it all seems part and parcel with IBM's ongoing reinvention, but I guess I'm still a bit puzzled about what they hope to really gain with getting into this market.  What additional value will IBM and Yahoo bring to the table, and what revenue will that generate for them in the long-run?  Is it simply a play for mindshare, or is there some Web2.0 potential here?  What's next: IBM getting into online apps?