Microsoft News Tracker

OK, it’s in Australia where the Zune isn’t available, but it still seems a little awkward to Use Microsoft to Win Apple Products:

Microsoft is dangling prizes made by arch-nemesis Apple to entice Australian web surfers to give its online search products a second chance.

Through its local joint venture with the Nine Network, ninemsn, Microsoft recently completed a full revamp of Live Search to improve results and integrate video, images, news and maps into search queries.

But in what is perhaps a sign of desperation given Google’s growing market share dominance, ninemsn is running a new Live Search promotion - Secret Search - offering surfers the chance to win prizes including the iPod Nano, Shuffle and Touch just for conducting searches.

Maybe Microsoft ought to try that in the USA too? No wacky Live Search Club games, no complicated Live Search cashback from retail purchases, just random prizes of good quality for searchers. Hit the rest of the article for an update on Live Search in Australia where Microsoft is ahead of Yahoo.

As had been rumored last week, Microsoft has acquired Powerset, a semantic search and natural language processing startup based in San Francisco for an undisclosed sum said by sources to be in the neighborhood of US$100 million. Microsoft SVP Satya Nadella explains the rationale:

Powerset will join our core Search Relevance team, remaining intact in San Francisco. Powerset brings with it natural language technology that nicely complements other natural language processing technologies we have in Microsoft Research.

More importantly, Powerset brings to Live Search a set of talented engineers and computational linguists in downtown San Francisco. This is a great team with a wide range of experience from other search engines and research organizations like PARC (formerly Xerox PARC).

We’re buying Powerset first and foremost because we’re impressed with the people there. Powerset CTO and cofounder Barney Pell is a visionary and incredible evangelist. When he introduced our senior engineers to some of the most senior people at Powerset — Search engineers and computational linguists like Tim Converse, Chad Walters, Scott Prevost, Lorenzo Thione, and Ron Kaplan — we came away impressed by their smarts, their experience, their passion for search, and a shared vision.

That shared vision is to take Search to the next level by adding understanding of the intent and meaning behind the words in searches and webpages.

There’s more on the technology there and on Powerset’s web site (including this demo video), but the big picture is to offer a better search to users than Google’s in order to whittle away at their share. I would have to observe that Powerset certainly isn’t the first or only company to try to apply semantic concepts or natural language processing to Web search - just Ask Jeeves.

Just like their Live Search Club , Microsoft’s Live Search cashback incentive program has drawn some "entrepreneurs":

That’s right, $630 in cash can be yours for $714. But if you access the page through a Live Search ad link that returns 35 per cent of the purchase price, you can make up the difference. And then some. So you make a profit, and so does the seller. At the expense of Microsoft and eBay.

Hit the link for further details as it is not clear that Microsoft is actually offering 35% anymore, but this was as inevitable as death and taxes.

Microsoft announced today that starting in 2009 all Hewlett-Packard consumer Windows PCs distributed in the USA and Canada will be preloaded with Live Search as the default Web search engine in Internet Explorer and with a custom Live Search enabled toolbar featuring their Silverlight technology. HP had previously been signed up with Yahoo.

Danny Sullivan has a nice table of PC OEMs, their US market share, and the search engine they have signed up with and adding HP clearly is a leg up for Microsoft since HP is a strong number 2 (24%) to Dell (31%) who signed with Google in 2006. Before this HP deal, Microsoft only had Lenovo whose US share was minimal.

The question, of course, is how many users actually stick with the OEM presets for IE or change them or switch to Firefox (which defaults to Google). All of the search engines track the sourcing from toolbars and preloads (use one of them for a search query and check the parameters on the URL) so they have a good idea on traffic and ROI at least after one of these deals is started, but Microsoft undoubtedly has more than ROI on their mind.

First Microsoft has to grow beyond their single digit Web search share if their advertising aspirations are to be realized and this is one way of doing that. Second, a Silverlight toolbar means a Silverlight preload which Microsoft had yet to ante up for with the OEMs and that’s critical if they expect to get their Adobe Flash killer off the ground. There’s been no insight into what sort of bidding went on for the HP eyeballs, but there are lots of reasons why Microsoft would not want to be outbid.

Back in 2005, Bill Gates suggested that Microsoft might provide financial rewards to attract search users,  but the devil is, as always, in the details. You can’t pay for raw numbers of searches, because the scammers would be all over it and the Live Search Club games of last summer had a similar problem. Now according to the Seattle PI’s Todd Bishop, Microsoft is set to try again with the announcement of an incentivized shopping promotion called Live Search cashback which only pays if you buy products from selected retailers. The somewhat oldtimey slogan is ‘Microsoft Live Search cashback is "The Search That Pays You Back".’

The basic idea is that you "search for cashback deals at Live Search cashback" and if you buy, Microsoft will put an incentive payment of some percentage of the purchase price into your "cashback account" which you can withdraw in cash. What keeps it from being merely an incentive shopping site is that if you perform a regular search at Live Search, available cashback deals will be flagged with a little gold coin/dollar sign icon.

Microsoft has apparently signed up a number of major retailers and is presumably making the incentive payment out of a sales commission paid by them. The incentivized shopping model is hardly new, but what is new is that it is being associated with a legitimate search engine. While I hope participation in the program doesn’t affect the rankings of search results, the suspicion always is that by mixing search results and what are effectively paid ads, the search engine is stacking the deck. More may be known when the formal announcement is made later today.

Update: The speculation is that this is based on the technology Microsoft received last year when they acquired the Jellyfish comparison shopping site which had promised to "SHARE at least half of every $1 we earn when you shop and buy products using Jellyfish.com." Also per the FAQ, you have to be a US resident to participate.

Update: The formal announcement doesn’t add much to the above. Some stats:

The complete Live Search cashback product portfolio includes more than 10 million product offers from more than 700 merchants, including more than 13 of the top 40 U.S. retailers.

Microsoft also announced Live Search Farecast for finding travel deals. It uses the technology acquired with Farecast in April.