Microsoft also announced that it was going to be increasing its $600 million/yr European research and development budget.  They are also anticipating employing several hundred including software developers.

The center in Paris is expected to be open in March 2009 and they are getting some pretty nice tax breaks too.  Microsoft will get 30 euros back for every 100 euros it invests.

Speaking in Paris, Balmer said:

We are the challenger, not the leader, in search, but we believe strongly that search is in its infancy and there is so much room for innovation. For companies like Microsoft search is the key for unlocking huge new opportunities in advertising.

In the US, Microsoft barely has 8% of the search market share, compared to Google’s 62%.  But in Europe, Microsoft’s share is even less at 2 percent.

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It was a novel approach to attempt to increase search engine market share.  Currently, Google has a commanding lead at about 63%.  Yahoo! is second with just under 20% and Microsoft is third at just over 8 percent.

The latest “pay to search” program from Microsoft is called SearchPerks and it works pretty simply:

1. Visit the site using Internet Explorer 6 or higher and sign up for SearchPerks.
2. Download and install the tracking program to a Windows PC.
3. Use Microsoft Live Search and earn “search tickets” every time you search – up to 25 per day.
4. Redeem those tickets for prizes.

The first time you signup, you are credited with 500 tickets and the first prize point is 5 music downloads for 525 tickets.  You can even get things like airline miles.

It could be worth a check because it is sort of like Microsoft giving you $5 to use Live Search.  If you download music, typically each song costs about $1 (5 songs = 5 bucks).  So, signup for SearchPerks, use Microsoft Live Search for a few days and redeem your 525 tickets for 5 music downloads .

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As one might expect, an announcement of a new search engine has created a pretty good buzz around the Internet, but many searchers using Cuil are less than impressed.  You can easily find comments about it taking minutes to return results and about it returning zero results for popular terms.  Many of the feedback that I have seen has been quite negative, which one might expect in today’s “instant gratification” Internet where you have only seconds to make an impression.

However,  I tend to be ever-so-slightly enthused with Cuil for two basic reasons:

• The are at least trying to come up with a new way of presenting results and are supposedly indexing more of the web than Google (although I have not heard Google making any claims as to how many pages it indexes).
• Their GUI is somewhat refreshing.  I like the colors and I like the “Explore by Category” box that breaks down information related to your search into categories.  I think the entire interface is well done.

Having said that, I certainly think that the returned results leave something to be desired.  Many of the searches that I did returned completely unrelated results on the first page, which would indicate an issue with the ranking algorithms.  I am sure they will sort that out, but I can’t help but wonder how much testing they did before launch.  For example, a search for “cuil search engine” on Cuil will not even list cuil.com in the search results.  Hmm.

Another issue is the slow response time for some searches.  It would appear that their servers are not currently up to the challenge of being a real threat to Google, or even Yahoo! or MSN.

Those last two points make me wonder how much testing they did and how exhaustive it really was.  One would think that success in those two areas would be the very foundation of a modern search engine and, therefore, would be top priority.  But maybe it was just a case of first day jitters.

All-in-all, I think it is unfortunate that there has been so much negative publicity surrounding Cuil.  They have some bugs to work out and that is to be expected.   I think that their algorithm will get smarter and their servers’ response times will improve.  In fact, a few of the searches that I tried early yesterday, which returned woefully unrelated results, were vastly improved when I tried them last night.  That is a step in the right direction and I would expect that things will get better.

Google competitor?  Not at the moment.  Threat to Google?  Not at the moment.  Should Yahoo! and MSN pay attention?  Not right now, but don’t get too comfortable.

TechCrunch and Search Engine Land have some extensive reviews of Cuil.

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When you search for a products, you will see links displayed that have the little graphic shown here. Make your purchase through one of those links and you will be credited with a rebate sent to an account setup by Microsoft.

Not sure if something like this is enough to boost Microsoft Live Search up from third place in the Search Engine war, but I think it is a pretty cool idea.

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In a letter sent over the weekend, Roy Bostock and Jerry Yang had a few barbs sent Microsoft’s way:

As a follow up to a recent meeting among our respective legal advisors we had on this topic, and at your request, we provided to you on March 28 a list of additional information we would need to further our understanding of the regulatory issues associated with any transaction. To date, you have still not provided any of the requested information…

We consider your threat to commence an unsolicited offer and proxy contest to displace our independent Board members to be counterproductive and inconsistent with your stated objective of a friendly transaction. We are confident that our stockholders understand that our independent Board is best positioned to objectively and knowledgeably evaluate our Company’s alternatives and to maximize value.

In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing.

Seems pretty clear to me. Yahoo is not opposing ANYTHING that brings value to its stockholders, including a purchase by Microsoft. Although, if Microsoft buys Yahoo, it will probably be a big blow for Open-Source software since much of Yahoo’s platform is open source and Microsoft wants the whole world to only use it’s clunky software.

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Despite that drop, Yahoo! search traffic was actually up. In fact, according to a comScore report, they were the big winner for the month with a 0.5% increase in use and, since they dipped 0.4% in November, that basically put them back where they were in October with a 22.9% overall market share. However, Google is still the big dog with 58.4% share of the Search market. That translates to more than 5.5 billion (yes, billion) searches per month using Google. That number does not include searches performed on YouTube and other Google owned properties, which tracked an additional 1.5 billion results in December alone.

As you can imagine, search traffic on shopping sites climbed quite a bit in December. For example, Amazon sites logged 215 million searches, which was a better than 20% increase over their numbers in November. eBay was up 3.9% and Craigslist was up 6.3%.

Social networking sites saw a decline in use in December. My guess would be the fact that people were actually networking the old fashioned way – fact-to-face at parties. That means they were not spending as much time searching on Facebook (-14.3%) and MySpace (-19.9%). Plus, in many cases, people are accessing those sites while they are at work and, since most workers are using up their vacation time before the end of the year, they were not logging in each day.

At any rate, the numbers should be back to normal starting this month, but Google is still going to be on top.

Check out our Flash graphic in the far right column for a visual .

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Of the 10 billion searches tracked, here is how they broke down during the month:

• Google captured 5.9 billion
• Yahoo! accounted for 2.2 billion searches
• Microsoft dropped just below the 1 billion mark at 984 million
• Ask was used 463 million times
• and AOL/Time Warner sites were used for 453 million searches.

AOL/Time Warner had the largest jump during the month (0.3 points) and Yahoo! had the biggest drop of -0.4 points.

For all you visual people out there, we have a pretty, little Flash graphic in the right column, so check it out

Related posts:

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