Microsoft Keeping Web Arsenal Well-Stocked

MOUNTAIN VIEW, Calif. -- Microsoft(MSFT Quote) has a not-very-secret weapon in its battle with Google(GOOG Quote) for Web dominance: a 700-person-strong network of labs dedicated to academic-quality research.

Although Microsoft Research is only a part of the software giant's $6-billion-a-year R&D effort, the unit is churning out flashy projects designed to wow users and in the process help vault MSN into a far more competitive position.

On Tuesday, Microsoft opened the doors a bit, putting on a kind of science fair at its campus here, demonstrating 13 of its more promising technologies for an audience of high school students, Silicon Valley residents and journalists. Although the projects on display were positioned as a more or less random sample of what the research group does, it was hard to miss the underlying message: We're going to make MSN cooler than Google or Yahoo!(YHOO Quote).

To be sure, any help MSN can get would be welcome. In the March quarter, for example, the Web portal brought in a relatively paltry $561 million, down from $581 million in the same quarter of 2005. And it swung from a profit of $102 million to a loss of $26 million. ...