Search and destroy

REDMOND, Wash. -- The footsteps heard by Google Inc. are coming from this pine-studded Seattle suburb where the dreams of Silicon Valley upstarts often have been dashed.

Once again, activity is stirring on the sprawling campus of Microsoft Corp. Once again the software company is playing catch-up in a technology field where its famously driven management team was slow to spot an opportunity -- and threat.

And once again technologists are betting the ultimate winner in the coming donnybrook over computer search won't be today's market leader, Google, or its Bay Area rival, Yahoo Inc., which now powers Microsoft's consumer search site. It will be the Puget Sound software goliath, which is known as a ferocious competitor.

Microsoft is investing $100 million to enhance search on its MSN consumer Internet service alone, and millions more on multiple search efforts throughout the company. They range from improvements to its custom search offering for businesses, to a more prominent role for search in the next version of the Windows operating system, called Longhorn, to a research project, dubbed Stuff I've Seen, aimed at integrating searches for data and files on computers and the Internet.

''There's no reason to think the ultimate search experience is a little box with a big long list," said senior researcher Susan T. Dumais, a Maine native who is leading the integrated search effort at Microsoft Research.

Just as they were in the mid-1990s, when they pressed their campaign to overtake Netscape Communications Corp. in the Web browser market, senior Microsoft executives are understated in describing their initiatives, and their strategy, in the search arena.

''If we can get out and provide a better search engine, which we're in the process of doing . . . it has a lot of upside for our business," Yusuf Mehdi, corporate vice president in charge of the company's MSN service on the Internet, told financial analysts.

The emergence of search as a key technology platform for computer users in their homes and offices, driving everything from online shopping to business research, took many at Microsoft and elsewhere in the high-tech industry by surprise. But what really has caught the attention of executives who once regarded search as an afterthought has been the recent explosion of search-enabled online advertising. Microsoft, though still only the number three player in search, saw a 43 percent growth in online advertising in the year ended June 30, enabling its MSN business to record a profit for the first time.

''Search has become the Holy Grail for Microsoft," said Gene Walton, founder of Walton Holdings, an independent equities research firm in New York. ''No one expected paid search ads to make so much money. It's a new trend, and it's a trend that no one thought was going to work. That's why Microsoft avoided it. Now they want in."

The early lead in the search business was grabbed by Google, a Mountain View, Calif., start-up incorporated in 1998 by Sergey Brin and Larry Page, computer science graduate students from Stanford University.

Google, which earned $79.1 million on revenue of $700.2 million in the second quarter, according to a document filed last week in connection with its forthcoming initial public offering, makes most of its money through ''paid placement" and ''contextual" ads. The former surround regular search results on Google's pages, and are related to the search topics, while the latter appear next to related content on third-party sites to which Google provides search technology.

To successfully tap into this advertising lode, Microsoft will have to increase its share of the searches conducted by Web surfers. Google's platform was used for 36.8 percent of searches, followed by Yahoo with 26.6 percent, MSN with 14.5 percent, and the AOL unit of Time Warner Inc. with 12.8 percent, according to a May survey by comScore Networks, a Reston, Va., consulting firm.

While employees have been laboring quietly for months on search initiatives, at the MSN and Windows product groups, at Microsoft Research, and elsewhere, efforts have recently accelerated and become more public. Even before last week's presentation to analysts, Microsoft on July 1 rolled out a revamped MSN search box reminiscent of the unencumbered Google box that has become a favorite of millions.

''We recognize that search continues to grow in importance," said Lisa Gurry, a MSN group product manager.

MSN promoted its stripped-down search offering in e-mail to Hotmail users Tuesday, the day after a new strain of the MyDoom virus slowed or temporarily shut down operations on Google, Yahoo, Ask Jeeves, and other search sites -- but not on MSN. (Peter Wootton, a spokesman for Microsoft, said the timing was a coincidence.)

For now, the new MSN search box remains a front end for technology powered by Yahoo. But that will soon be changing. Microsoft developers are readying their own back-end search technology, expected to be installed in the next six to 12 months. The effort is one of the most significant investments underway at MSN, Gurry said.

''Up until now, they've been renters," said Danny Sullivan, editor of the Search Engine Watch website and a top search authority. ''They've rented their search technology from Yahoo. Now they want to become homeowners. They're inviting us in to see their home under construction. By the end of the year, they'll be ready to move in."

Microsoft is also investing in enhancements to its SharePoint product, which harvests data from files, websites, databases, and other repositories, and creates a clearinghouse for businesses and other organizations to search, and to a custom enterprise search service offered through Microsoft's consulting arm.

Developers are tinkering with Microsoft's ''secret sauce," the mix of algorithms that power its search engines, experimenting with a ranking of search results based on which Web pages are most frequently visited by computer users.

Google's approach, by contrast, relies heavily on links between sites. ''The big race right now is all about relevancy," said Drew DeBruyne, program manager for SharePoint. ''Anytime someone does a search, the idea is to return the 20 best results on the first page every time."

Key to Microsoft's strategy is embedding search more conspicuously into Longhorn, the new Windows version expected in 2006 or 2007. While company officials won't be specific, DeBruyne promised, ''Search will be a pervasive part of the experience. A search box will be part of every window in Windows. It'll always be available."

The ability to capitalize on its operating system is seen as a huge competitive advantage for Microsoft in search, just as it was when Microsoft knocked Netscape from its perch in the Web browser market. Microsoft survived a long-running federal antitrust case, which focused on the tie between Windows and the company's Internet Explorer browser, by agreeing to operate under a court-ordered consent decree. It's not yet clear what effect, if any, that outcome will have on its efforts in the search arena. But in Silicon Valley and beyond, jaded Microsoft watchers talk of the company preparing to ''pull a Netscape" on Google.

''Clearly they've identified search as being one of the near-term opportunities for the company," said Robert W. Lund, principal at Weikko Research Inc., a stock research firm in Philadelphia. ''And with anything having to do with the Internet, they can ramp up pretty quickly. They'll definitely erode a lot of Google's space."

Because they are in a ''quiet period" in the run-up to their IPO, which will seek to raise up to $3.3 billion later this summer, Google officials said they couldn't comment on their competition with Microsoft. Yahoo, currently both a competitor and partner of Microsoft, is preparing for the day when Microsoft drops Yahoo's search technology and installs its own back-end technology on its MSN site.

''What will really distinguish Yahoo going forward will be our ability to leverage our robust content and relationships with 140 million registered users," said Stephanie Ichinose, a spokeswoman for Yahoo in Sunnyvale, Calif.

Microsoft's shorter-term efforts notwithstanding, the company is betting the future will be in technology that permits users to perform one search to retrieve information from a variety of sources that now require separate searches: Web pages, computer hard drives, databases, e-mail, and even instant messaging threads.

The idea behind Stuff I've Seen, an internal prototype developed by Dumais' team at Microsoft Research, is to fashion what she calls a ''single point of entry." Thus, if someone types a name or a place into a search box, the results could be a combination of data from computer files, websites, and e-mail -- all on one screen. ''If you think about the search experience now, it's really brain dead," Dumais said.

While the company's initiatives may appear disparate, there is usually, when it comes to Microsoft, a method to the madness.

''There are benefits to having multiple development efforts going on within a company," suggested Alva Taylor, strategy and technology professor at Dartmouth's Tuck School of Business. ''Sometimes it's better to have three teams of really smart people working on a problem, and then picking and choosing the best ideas."

Robert Weisman can be reached at weisman@globe.com.