Commentary: MSN Search--just good enough

by Charlene Li, Principal Analyst

After two years of development, Microsoft's MSN service debuted a new version of its search engine Thursday. It won't beat Google, but that's OK--it doesn't have to.

Owning a proprietary search algorithm will give MSN the flexibility to innovate in key areas like desktop, local and personalized search--all prerequisites for being competitive in the upcoming search battles that will be waged against players like Google, Yahoo, Ask Jeeves and America Online.

		Related story Microsoft updates search site The company, however, is still relying on Yahoo technology and will continue to do so until sometime next year.

With its own search engine in hand, Microsoft can now be considered a serious player in the search wars. While MSN is a long way off from usurping Google's lead in search, it has built a solid foundation on which to innovate in the future. Here's a quick overview:

• The technology: It's just good enough. In initial testing, MSN's new search engine delivers search results that are as good as other engines. With 5 billion documents, the index is in range of its competitors. The engine also has a few innovations in the interface that give users more control--such as its Search Builder feature, which narrows search results by freshness and popularity. These are interesting features, but ones that will be quickly copied by other players.

• The impact: It keeps MSN users loyal. While Microsoft generates significant traffic from its MSN.com portal and Hotmail users, only 40 percent of online consumers who use MSN at least weekly also use it most frequently to search the Internet. The company's primary goal will be to persuade non-MSN searchers to come back into the fold. Once the new algorithm comes out of beta and is integrated into the site, look for extensive marketing and promotions to encourage people to give it a try.

• The potential: MSN can now innovate in crucial search areas. Competition in the search field will be a battle for the loyalty of each site's core users--and all of the search engines will use desktop search, local search and personalized search to tie in users. Having its own search algorithm will allow MSN to finally innovate in these areas that will define the future of search.

© 2004, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.