May 27, 2004
SEATTLE - Microsoft Corp. is looking beyond Internet searches, heading into its battle with Google Inc. with technology designed to allow people to scour their e-mails, personal computers and even hefty databases for information.
The search system will give consumers "an end-to-end system for searching across any data type," Yusuf Mehdi, head of Microsoft's MSN division, told analysts at a Goldman Sachs Internet conference Wednesday in Las Vegas. His remarks were broadcast online.
The technology is designed as a major search improvement for users trying to grapple with an increasing amount of digital information, offering a single hunting system instead of several different search engines, file management systems or other tools.
Microsoft's Windows operating system, which is on 90 percent of personal computers, provides tools for file management on PCs. But Mehdi conceded it doesn't have a quick system for searching.
"I think it's fair to say that we will tackle all of the things that you expect, including PC search, as part of the MSN effort," Mehdi said.
Microsoft plans to release an early version of the technology soon, as part of the software giant's push to compete with Internet search leader Google Inc. A final version is expected in the next 12 months, he said.
He added that the new technology would be available long before the next version of Windows, which isn't expected until 2006. Microsoft has previously said that improving PC search will be a key component of that system, code-named Longhorn.
Joe Wilcox, an analyst with Jupiter Research, said the end-to-end search technology illustrates how concerned Microsoft is with besting rivals including Google, the current Internet search favorite. He expects Google to also release technology soon for searching the desktop.
The concern is that Google and others will increasingly encroach on Microsoft's control over desktop computing.
"Microsoft is scrambling to protect its turf," Wilcox said, noting that rival Apple Computer Inc. also has a more advanced system for searching both the Internet and Apple computers.
Microsoft chief executive Steve Ballmer has previously conceded that one of the Redmond, Wash., company's big missteps was that it didn't initially invest in building its own Internet search technology, relying instead on a vendor to provide MSN's search results.
But as Google, Yahoo! and other Internet search options have exploded in popularity, Microsoft has turned massive resources toward its own search technology. The effort extends across many of Microsoft's business units, but the most high-profile moves are in its MSN division.
Mehdi told the analysts that personalization is going to be an important part of Microsoft's search efforts.
The company hopes to soon have on its MSN Web site a system similar to Amazon.com's technology that will recognize a user even if that person hasn't expressly signed on to the Web site, he said. It also is working on a system that will track a user's movements over the Internet and use that data to build a more personalized Web page based on the person's surfing habits.
Mehdi conceded that such efforts create thorny privacy issues.
"We're going to make a very big investment in personalization, but it's very clear that privacy and consumer trust is really a key thing in getting your arms around personalization," he said.
Mehdi added that "some companies have just not done it right," and lost costumers as a result. In an apparent jab at Google, he said Microsoft sees a big opportunity inserting advertising into e-mails, but thinks any such effort has to be done right.
Privacy advocates have criticized Google's Gmail e-mail service because of plans to scan e-mails for keywords and insert ads based on what the user appears to be writing about.
Analysts also have noted that Microsoft has had its own troubles building consumer trust. Some say that could be a barrier to Microsoft's success in winning users over to its personalized search technology.