MSN is not only trying to increase the relevance of its Web search results but will also offer tools for users to search files and e-mail messages on their PCs—features already offered by ISVs such as Enfish and X1, and being considered by Google. If successfully executed, MSN's search plans could put Microsoft on par with Google but may also weaken one of the main justifications for WinFS, a new file system planned for the next version of the Windows client.

Strategy: Change the Game

In a May 26 speech at a conference sponsored by financial services firm Goldman Sachs, MSN Vice President Yusuf Mehdi gave new insight into how MSN will meet the threat from Google, which is drawing users away from MSN sites with its highly popular search engine, and which threatens to compete with MSN in other areas, such as Web-based e-mail. MSN not only hopes to match or beat Google at providing relevant Web search results but also hopes to increase users' expectations of what a search tool should provide by tying it more closely to the PC and to corporate networks where Google has no presence.

For instance, MSN will deliver tools that allow users to search files on the PC, e-mail, corporate networks, and subscription-based Web sites. At least some of these features will be available by mid-2005, probably appearing in the MSN Toolbar, a free, downloadable add-on to Internet Explorer. MSN may also offer a downloadable "deskbar" application that offers these search features from the Windows desktop even when users do not have a browser open. Such developments may help Microsoft catch up with Google, which has already beta-tested a Google deskbar for Web-only search and is reportedly testing a similar application that would add PC search functionality.

If successful, the MSN search initiative could weaken one of the main justifications for WinFS, a future file system planned for the next version of Windows (code-named Longhorn). Among other benefits, WinFS is supposed to offer better file search by letting users easily associate files with user-defined properties, such as the genre of music in a media file, and then search the file system on those properties. MSN's search tools will be delivered well before Longhorn. If they work as advertised, consumers may have one less reason to upgrade.