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Microsoft's New Search Czar Outlines Strategy

Microsoft is lagging far behind Google and Yahoo, but it's trying to close the gap.

Microsoft has long lagged behind Google in Web search, struggling to gain market share with its Live Search product and advertising dollars with its adCenter pay-per-click ad network, and lost two top executives earlier this year. Now, Microsoft senior VP Satya Nadella, a fresh face at the helm of Live Search and adCenter, has grand designs for Microsoft's place in the search pantheon.

"No one's yet gotten to a point where they're locked into any one search engine," Nadella says. "When it comes to the core algorithmic relevance, we have matured to a point where we can compete with the Googles of the world. We need to get to the point where the ability to get that word out broadly gives us the shot. Now our challenge is to make sure people are more engaged with us."

There are early hints of success, as Internet metrics firm Compete found Live Search gaining search share at the expense of Yahoo and Google in June. A recent promotion called Live Search Club that rewards users with ringtones, t-shirts and copies of Windows Vista may have helped bolster Live Search, but one month does not a watershed make. According to the Compete numbers, Microsoft still trails Google and Yahoo, with less than a fifth of Google's share. However, according to Microsoft numbers, 60% of Internet searchers use multiple search engines, and 30% of searchers in the United States use Live Search from time to time. That's enough to prove to Nadella there's an open opportunity.

Microsoft entered the search game late and only started developing its own search engine a couple of years ago, and now the company's owning up. "Yes, we were not there in the beginning of this Web search story," Nadella says. "It's fair, we missed it, but we are getting back into the game in a major way."

One of the ways Microsoft may get back into the game is by moving beyond traditional Web search to better opportunities with less entrenched competition. For an example: mobile search, in which Microsoft has been investing heavily.

Last Friday, the company introduced Windows Live Mobile Search 2.0, available for Windows Mobile and J2ME phones and soon BlackBerrys. The downloadable version has includes movie showtimes, local data including reviews, support for storing maps on the device, GPS support and turn-by-turn directions that can prompt users to re-route if they get lost. The mobile Web version supports image search and local directory listings.

Microsoft is quickly gobbling up start-ups, acquiring TellMe, which has a popular voice-activated mobile search service, European mobile advertising company ScreenTonic and mobile search technology provider MotionBridge, all earlier this year. "We think mobile search is going to be a big growth market for us," Nadella says. "It gives us an opportunity to start on a level platform. If you look at the reviews, we often come in first."

Mobile search is but one leaf of a strategy book that includes a focus on "sub-classifying search into various verticals," as Nadella puts it, including mobile, local, entertainment, health, multimedia and commerce, among others. "Instead of all search being just about one destination site and one set of results, we definitely believe in much broader based on vertical so we can make search much more contextual," Nadella says.

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