Microsoft Takes On Google, Yahoo!, With New Search Engine

Microsoft unit MSN will this morning take the cover off its latest beta version of MSN Search, touting a faster, more intuitive user experience and enhanced relevance as its strongest new features.

Analysts say that MSN's move puts the company in a position to directly take on Google and Yahoo!, but stress that MSN's late entry into the search engine field puts it at a considerable competitive disadvantage.

JupiterResearch Analyst Niki Scevak said the MSN new product is "not much worse" than the market-leading offerings of Google and Yahoo!, but added that Yahoo! and MSN are both still "in Google's rear view mirror."

Still, he said, despite the company's late entry into the field, it appears inevitable that MSN will capture market share from Google and Yahoo! "We've seen the weakest position MSN will ever be [in] in terms of search--you won't see that again," he said.

In the short term, Scevak said that 10 percent to 15 percent of market share is a "very reasonable goal" for MSN Search. He believes it can rapidly achieve this goal by leveraging the search traffic MSN already receives as a portal, as well as added traffic from its Hotmail, and Messenger properties.

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The MSN search engine itself is comprised of an index of more than 5 billion Web documents, which is larger than both Google and Yahoo! The index will be updated "weekly and even daily," according to the company--more often than both Google and Yahoo!

Mark Mahaney, an analyst for American Technology Research, said that, prior to the launch, "it's impossible to know" how effective MSN's foray into search will be. He added that much depends on the manner in which MSN markets its new search product to consumers. What's more, he said, integration of key add-ons, such as desktop and browser search, could be determinative of whether MSN search's usage expands beyond its portal user base.

Daniel Read, vice president of product development for the competing search engine AskJeeves, said MSN will have to substantially differentiate itself from the leading search brands in terms of technology and usability in order to steal significant market share from them. "I don't see that," Read said of the new product.

From the early tests he conducted, Read said that MSN Search "seems to be a pretty similar technology to Google and Yahoo!" He added that AskJeeves is "not particularly worried" about Microsoft's entry in the space. "In some ways, it's welcome competition," he said.

Bill Tancer, vice president of research for Hitwise, an Internet market research firm specializing in traffic, added that MSN will find it difficult to surpass Google's psychological grip on the nation. "Google is ubiquitous," he claimed, adding that Hitwise research, which segments the entire U.S. population into 66 different psychographics, shows the Google brand has near one hundred percent penetration across each psychographic segment.

Of course, Microsoft has been in the latecomer position before--most famously when its Web browser, Internet Explorer, entered the market behind then-leader Netscape. Years later, Internet Explorer has a 95 percent share of the browser market, and Netscape is now tucked away in an obscure corner of Time Warner unit America Online.

Scevak added that he doesn't expect MSN to enter the ad market as a competitor of either Google or Overture Services, Yahoo!'s subsidiary and sponsored links provider. He said having its own advertising marketplace wouldn't necessarily give MSN a competitive advantage over what it currently receives from its revenue share agreement with Overture, which he estimates at between 85 and 90 percent of ad sales.

Among the key elements of MSN search are user control features. With the new search tool, consumers will be able to search specific types of content using search tabs for news, images, and the Web. Pull-down menus also allow consumers to refine their searches by location, or by other criteria they choose.

Geographical information will be assigned to Web pages in the MSN Search index, allowing users of its "Search Near Me" function to receive the results closest to their location without having to sift through the listings for an entered location, according to the company. The custom Search Builder allows consumers to manually emphasize or de-emphasize certain results criteria, such as domain name, country or region, most recent, most popular, or language.

Direct results to actual written questions are another new service. Responses to questions like "how many pints are in a quart?" will be provided by Encarta, Microsoft's encyclopedia. As part of the MSN Search technology, Encarta will answer a number of category queries, including definitions, calculations, facts, and conversations, as well as solutions to equations. Search competitors Google and AskJeeves offer similar functionality.

Another feature links consumers to MSN Music when they type in the name of a given artist, song, or album.

This is the second announced beta version of MSN Search, which is located at a new URL: http://beta.search.msn.com. The first beta version was released a month and a half ago. The new engine is available today in 26 worldwide markets and 11 languages.

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