Microsoft
The new program will divide search results into different categories, according to a person given a test version of the program by the company. The software uses a panel on the left side to list the categories, along with past searches and related queries, said the person, who declined to be named because the details are confidential.
The company trails Google 8-to-1 in search traffic, a gap that has widened since Microsoft introduced a home-grown search engine in 2004. Googles lead helps it refine its software to better anticipate what users are seeking, making it harder for Microsoft to catch up. Google also can command more in advertising dollars.
“When a competitor reaches the kind of dominance Google has, its almost impossible to catch them,” said Rob Enderle, an analyst at Enderle Group in San Jose, California. “This is really testing whether Microsoft can still do what they did when they were young, which is enter a market from behind and catch up. They havent had what it takes to do that for a long time.”
Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, declined to comment on any plans to unveil a new search engine publicly. The company had previously said it was testing a search engine under the name Kumo internally.
Yahoo Talks
Microsoft is holding talks with Yahoo! Inc. about combining their search efforts to better challenge Google, said people familiar with the talks, which are confidential. Yahoo is second in U.S. Internet searches, with Microsoft ranking third.
In one proposal, Microsoft would handle the two companies engineering for both Internet search and graphical-display ads, while Yahoo would oversee ad sales, one of the people said. A leading proposal hasnt emerged from the talks, the people said.
Microsofts new search engine would lump results into categories specific to the query. For example, a search for a product may return photos, manufacturers Web pages and reviews, as well as places to purchase the product, according to one of the people. Each category would be included in a menu on the left side of the screen, with related searches and past searches listed in a panel below the category tabs.
Market Share
Microsoft accounted for 8.2 percent of U.S. Internet searches in April, according to research firm ComScore Inc. Google had 64.2 percent, while Yahoo had 20.4 percent. Microsofts share has declined since it introduced a search engine based on its own technology, rather than one licensed from Yahoo.
After a failed $47.5 billion bid to acquire Yahoo last year, Microsoft has snapped up the companys search engineers to bolster product development. In December, Ballmer brought on Yahoos Qi Lu as president of Microsofts online division.
Microsofts underdog role in the search market gives it room to experiment, Ballmer said in a March interview. The company is boosting spending on research and data centers, he said.
Google makes about twice as much in revenue for each Internet query as Microsoft, Ballmer said. That forces Microsoft to pay more to computer makers and mobile phone carriers to get its software preloaded on their devices.
“Microsoft has made some massive investments in both acquisitions and people, and they havent gotten anything for it yet,” Enderle said. “If after all this time with all this money, they still cant do anything, it really may be time to go back to square one.”