Microsoft Boasts Search Engine Progress

Steve Ballmer, CEO Microsoft, speaks about connectivity during the Strategic Account Summit at the Microsoft Corp. headquarters May 4, 2006 in a Redmond, Wash. file photo. First-quarter earnings have been surprisingly strong, and corporate America is on pace for its 16th straight quarter of double-digit profit growth. (AP Photo/Kevin P. Casey, File) (Kevin P. Casey - AP)

REDMOND, Wash. -- Two years after conceding his company erred in failing to develop its own search engine, Microsoft Corp. Chief Executive Steve Ballmer boasted Thursday of progress in fighting industry leaders Google Inc. and Yahoo Inc.

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'd have preferred to have gotten started sooner.

"It would've been nice, there's no question," Ballmer said Thursday in an interview with The Associated Press.

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."

Redmond-based 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 U.S. 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 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.