Microsoft Debuts Search Engine, But Skeptics Remain

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After 14 months of work and a $100 million investment, Microsoft rolled out a test version of its new search engine late Wednesday night.


The new MSN Search mimics technologies already offered by Google, Yahoo and Ask Jeeves. For instance, MSN offers direct answers from its Encarta encyclopedia to natural language searches such as "What is the capital of Albania?" It has a personalization tool that lets searchers set criteria for searches. Other features include local search; image and news search; and search shortcuts.


Microsoft is expected to test the site for a few months before integrating it into MSN, which currently licenses Yahoo's search technology. Microsoft is also expected to unveil a desktop search tool in December. Google already offers such a product. Yahoo and Ask Jeeves plan to release their own desktop search tools.


Microsoft is a distant No. 3 in the search market, according to ComScore Networks. In August, Google received 36.1 percent of searches and Yahoo 30.6 percent, while MSN's share was 14.4 percent.


Microsoft has made search a priority after allowing Google to cement a lead in the industry. Earlier this week Microsoft CEO Steve Ballmer vowed, "We will catch up, and we will surpass."


Yet several industry analysts question whether Microsoft can make much of a dent in the search market, particularly since its competitors continue to innovate rapidly. Google has expanded on its Web search to include desktop search, book search and a searchable e-mail service with nearly unlimited storage.


"This is a more competitive market for Microsoft to have an impact on than they've encountered in a long time," Morgan Stanley analyst Mary Meeker said last week at an industry conference. Morgan Stanley was a lead underwriter of Google's $1.7 billion stock offering in August.


Meeker said Microsoft would need to develop search technology that is 50 percent better than Google's and Yahoo's in order to gain a noticeable shift in search market share.


"Right now, because it's beta, I don't think those features have the necessary pull to break Google's almost religious-like aura," said Chris Sherman, associate editor at Search Engine Watch, a search industry Web site, and president of search consultancy Searchwise.


In a statement, MSN corporate vice president Yusuf Mehdi said the new search technology was "creating a new, higher standard for online search -- one that helps consumers find the information they need, when they need it."


Sherman expects that Microsoft has much more compelling features to integrate into its search engine to better differentiate it from Google and Yahoo. Microsoft's research department is working on a tool called Stuff I've Seen that catalogs every file, Web site or calendar entry a user has come across. With control of proprietary applications, such as Outlook, the tool could index more information than Google's desktop search.


"I don't think this is their last and best try by any means," Sherman said.


Microsoft aggressively crawled the Web to build its index. It expanded its index from 1 billion Web pages to 5 billion in four months. Google said Wednesday night that its index includes 8.1 billion pages, up from the 4.3 billion it reported in February. However, many search analysts dismiss the importance of index size as a gauge of search relevance.


The new MSN search engine, available in 26 markets and 11 languages, has a feature called Search Builder that lets users customize searches by adding parameters such as site type and language. It also boasts an image search index of 400 million images.


MSN has a local search feature called Search Near Me, which helps users find local businesses and other information. It returns Web pages based on a searcher's location identified in his search preferences. Google and Yahoo offer local search engines that mix business listings, Web content and mapping.


Even with its own search technology, Microsoft will continue to rely mostly on Yahoo's Overture Services for paid search listings. Their agreement runs through June 2005.


"I think that's absolutely going to change," said Nate Elliott, an analyst with Jupiter Research, who thinks MSN will offer its own paid listings program. "That's where the money is."


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