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Microsoft talks of progress in search engine business

BETTER LATE THAN NEVER The software giant's CEO boasted on Thursday that his company had made good progress in the highly competitive search sector

AP , REDMOND, WASHINGTON

Steve Ballmer, CEO of Microsoft, speaks about connectivity during the Strategic Account Summit at Microsoft Corp headquarters on Thursday in Redmond, Washington.

PHOTO: AP

Two years after conceding his company erred in not developing its own search engine, Microsoft Corp chief executive Steve Ballmer boasted on Thursday of progress in fighting industry leaders Google Inc and Yahoo Inc.

Ballmer pointed out that Microsoft has, in a relatively short time, advanced in two key areas by creating its own search engine and online advertising platform.

But the software maker still has plenty of work to do -- and Ballmer admits that he had have preferred to have gotten started sooner.

"It would've been nice, there's no question," Ballmer said on Thursday in an interview.

Still, Ballmer defended the company's progress so far.

"I like to tell our people, `I like the years when we make at least a year's progress in a year,'" Ballmer said. "I think we've made more than two years' progress in the last two years, so I'm excited about that. And yet, we have a whole lot more innovation that we want to bring to these areas."

Ballmer spoke at the same online advertising conference where two years ago, he described his company's search error as "the thing I feel worst about over the last few years."

Microsoft only recently began using its own technology for delivering search results, and it remains substantially less popular than Google and Yahoo. Nielsen/Net Ratings reported that Google had 49 percent of the US search market share in March, while Yahoo had 22.5 percent and MSN Search had 11 percent.

Microsoft executives have repeatedly argued that the industry is just beginning to understand the potential of Internet search and that Microsoft is in it for the long term.

"I think we'll look back on this as the DOS era of search," said Christopher Payne, a corporate vice president in charge of Windows Live Search, referencing the very early days of the computer operating system.

Microsoft chairman Bill Gates, speaking at the same conference on Wednesday, conceded that Google has done "a great job" on building a search engine and advertising platform.

But he insisted Microsoft's effort is strong.

"I think this is one of the rare cases where we're being underestimated," Gates said.

On Thursday, Microsoft said that it had acquired Massive Inc, a company that inserts advertising into video games, and will work to use Massive's technology for other online products.

Financial terms of the deal were not disclosed.

Thursday's acquisition is part of the company's efforts to improve its online advertising and better compete with search rivals Google and Yahoo. The deal was announced at an online advertising conference at Microsoft's Redmond headquarters.

Advertising has long existed in video games, mostly in the form of static ads and product placements that cannot be changed once the game is sealed for sale.

Massive allows marketers to deliver fresh, new ads into console and PC games via an online connection, including Microsoft's Xbox Live. In games that incorporate Massive's technology, advertisers can change the ads around -- inserting a movie promotion one day or a soda ad the next, for example -- and target ads to specific geographic areas.

Microsoft said in a statement on Thursday that it hoped to make such features available in other products, such as its MSN online products. Massive's technology also will become part of the company's adCenter sales platform.

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