Microsoft bets that Bing will beat Google

Software giant takes on search leader by spending millions on its new engine

Microsoft hopes to unseat Google as the internet user's search engine of choice after spending millions of dollars to launch its new Bing browser yesterday, though one analyst believes it struggle to overtake its giant rival.

Steve Ballmer, the chief executive of Microsoft, unveiled the new brand at a news conference in the US yesterday, saying Bing would help people "cut through the clutter and make faster, more informed decisions when searching online". Mr Ballmer has previously said he wants Microsoft to be at least the second-biggest player, which would mean overtaking Yahoo! This week, executives said the new service was "really take the fight to Google".

Ashley Highfield, the managing director of consumer and online for Microsoft in the UK, said: "Having a single dominant player in any market is a huge opportunity. Agencies and clients are crying out for a rival to Google."

Microsoft's Windows system currently runs a search engine called Live Search, which has struggled to capture even 10 per cent of searches in the US. Google has 64 per cent and Yahoo! 20 per cent. Rebecca Jennings, an IT market analyst at Forrester, said: "Clearly Microsoft has to differentiate itself. Looking to overtake Google is brave, even Yahoo! will prove a challenge. People are so used to Google, shifting them will be hard."

Bing goes live in the US on 1 June, and will launch in Britain later this year. It is currently running a beta, or testing, site in Britain.

There is a team of 60 people working on tailoring the site to the UK market and the search centre has been developed in the UK since October. Mr Highfield added that it is not an extension of Live; "it is more starting again".

The engine is run on cutting edge algorithms, which work on tailoring searches much closer to what customers want. "The more you use it, the better it gets," Mr Highfield said. It is hoping to entice consumers with the relevance and quality of its information, as well as simplify the searches.

"People are used to web search 1.0. Google pretty much looks the same as it did 10 years ago. This website really takes it on. It cuts out so much of what isn't wanted. In two or three years this is how search will happen," he added.

Forrester's Ms Jennings said: "Bing will live or die on how clever it is, and how it learns what consumers want. It is creating a brand from scratch so marketing will be crucial."

Microsoft is betting heavily on this being a success. It has spent "a lot of money. This is a major investment," Mr Highfield said, although would not reveal the exact sum. The company is believed to have earmarked a budget of between $80m to $100m on marketing the launch alone. Mr Highfield said: "It is important that the product lands well. This is a statement of intent for a product that is game changing. It is the next generation of research."

He also pointed to dissatisfaction with the current search engines. Data provider comScore found that almost a third of searches are abandoned without a satisfactory result. The company added there were currently 37 million search users in the UK alone.

Microsoft was highly secretive in the run up to the launch and gave the project a codename of Kumo, which is Japanese for cloud or spider. It launched yesterday with the line: "What you have Bing searching for."

There are huge advertising revenues to play for. Search ads have held up relatively well despite the downturn according to Alex Hoye, the chief executive of the digital marketing agency Latitude. The UK search industry was worth £2.75bn in 2008, according to Econsultancy, up from £2.2bn in 2007. In the US, the value of the search market was put at $15.7bn (£9.83bn) by the Search Engine Marketing Professional Organisation.

Mr Hoye of Latitude, whose clients including Tesco Personal Finance and Land Rover, said: "It is a relatively lopsided market share for Google at the moment. We market across all three of the major search engines, but the majority spending is on Google."

Live struggled to bring in advertising revenue and the company has changed its plans to make the service pay. "We can monetise it more effectively because of the information detail. It can be more actively targeted," Mr Highfield said. Mr Hoye said Bing looked good but it was hard to judge whether it would pull in the users: "People will go to where the results are best and the advertising will follow."