Microsoft takes on Google, Yahoo with new search engine

Wednesday, February 2nd, 2005

Gillian Shaw

After almost two years of developing and testing its own technology, Microsoft launched a new Internet search engine Tuesday in 25 countries and 10 languages.

The move boosts Microsoft’s position in a highly competitive market dominated by Google and Yahoo and while industry analysts say the new search service has some catching up to do, Microsoft promised Tuesday’s launch is only the beginning.

Until it developed its own product, Microsoft was relying on Yahoo’s Inktomi search technology to power searches on its MSN (Microsoft Network) sites. The new search engine fills that gap with Microsoft technology and paves the way for the software giant to challenge the competition in a market that is expected to grow in the U.S. to $3.2 billion US this year, up from last year’s $2.6 billion. By 2009, advertising revenue is expected to reach $5.5 billion.

Niki Scevak, an analyst with Jupitermedia Corp., said the new search engine is “leaps and bounds ahead of the almost Frankenstein approach they had with the partnership.”

“The technology is now under Microsoft’s control,” he said. “The pace of their catch-up is remarkable but it is still catch-up rather than leaping ahead of Yahoo and Google.”

Scevak said search engines are unlike other media in terms of competitive space. While television networks can charge ad rates depending on where they stand relative to competitors in the ratings, money is made selling online advertising when a consumer clicks through to the advertiser’s website.

“It is very democratic,” he said. “The more volume you have directly correlates to how much revenue you have. In search engines it is simply the volume of traffic times the cost per click. There is no premium for being number one.”

The price per click-through on the new MSN search site for ads ranges from 50 cents to $5 US per click. The average click price in the sector is rising, with Jupitermedia predicting it will reach 47 cents in 2009, up from 29 cents in 2003.

Stephen Evans, manager of information services and merchant platform for MSN Canada, said the launch marks an important step for the company.

“This is a first step for Microsoft. We are just starting and we will be investing heavily in doing a lot of new things.”

Evans said it is a key part of Microsoft’s integrated online offerings.

“Our focus is to answer people’s questions quickly and efficiently,” he said. “It’s about the potential of search, that is important for Microsoft.

“Our main goal is to provide consumers with great online experiences and search is a part of that.”

Microsoft has spent some 20 months and $100 million US developing and testing the technology. It has been operating a beta version in recent months as it tested and tweaked the service.

“We have an index of over five billion Web pages and we refresh that index every couple of days,” said Evans.

“We are in a competitive market, but we have built a foundation on which to innovate and we plan to announce a lot of new innovations in the next few months.”

In Canada, the service is available at, at, or simply by pointing your browser at which redirects to the Sympatico/MSN home page.


Among the features of the MSN search site:

– A link to Encarta, allowing users to search Microsoft’s online encyclopedia, allowing a free two-hour pass (each visit) to all of Encarta’s premium content.

– A search builder that Evans suggests you “think of as advanced search on steroids.” It offers a number of ways to filter results, to increase the relevance of the sites that are served up.

– In beta testing is a desktop search link, following the lead set by Google’s desktop search function.

– A ranking of results geared to the country you are in.

– Image search allowing users to filter on the basis of such factors as size, colour or black-and-white, and filter out images that are deemed objectionable.

– Searching from other MSN channels, including from MSN Messenger 7 beta in which users can highlight a key word in a message to launch a search.

– News bots in beta that build a page with the most commonly read stories at the time, along with an individualized offering, based on the user’s interests.

© The Vancouver Sun 2005

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