MOUNTAIN VIEW, Calif. -- Microsoft (MSFT) has a not-very-secret weapon in its battle with Google (GOOG) 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).

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.

Fair or not, Microsoft has never had the reputation of being a terribly innovative company. And it's difficult for a layperson to evaluate the worth of the company's research. But it certainly appears that Microsoft is mobilizing its considerable resources, and more importantly, its high collective IQ, to get back in the game.

Consider the problem of navigating the Web with a PDA or cell phone. The connection may be fast, and the screen may be bright and colorful, but the keypad is awkward at best, and often nearly unusable.

Voice navigation is one solution, but Microsoft is developing an elegant way to make text input on a handheld fast, easy and accurate. Say a user wants to browse for information on Secretary of State Condoleezza Rice. "The Wild Thing," in reality a complex algorithm linked via the Web to the MSN database, lets him or her type something like this: C* rice (the * is a wild card), and come up with a list of suggestions in order of probability headed by Condoleezza Rice. Using the rankings of various queries, the list even includes common misspellings of her name, as well as guesses that are much further afield.

Simple as that solution is, it might still be difficult to input the search on a cell phone, so researchers developed a way to let numerals represent the keys. Thus the search for Secretary Rice is accomplished by entering 2 7423, with the space representing a wild card.

"The Wild Thing" can also be used in conjunction with MSN's "Virtual Earth" database of maps and aerial photos to quickly search for a business; a few keystrokes entered on a simple form revealed the location of the nearest Starbucks in Mountain View and a map to get there.

Microsoft researcher Bo Thiesson says "Wild Thing" will soon be handed over to MSN but won't go live until an extensive round of usability testing -- and likely tweaking -- is completed.

Not every project at Microsoft Research is tied so closely to a product. And that's just fine, says Roy Levin, director of the company's Silicon Valley lab. "Advancing the state of the art is the first priority; helping the business is second," he says.

Levin is quick to add, however, that his dictum does not imply a lack of concern for commercial applications. "We need to innovate, but innovation is not something you just asset. You must stay on the cutting edge. And to do that, your work has to be subject to peer review," he said during an interview.

So staffers at Microsoft Research's five labs (including facilities in Redmond, China, India and the U.K.) turn out a steady stream of academic articles and papers for journals and conferences.

Unlike the rest of Microsoft, which reports to CEO Steve Ballmer, the research group reports directly to Chairman Bill Gates. The labs and the business units are linked by a small team of program managers, all of whom have a track record of actually shipping a product. "They're the connectors; they know where our technology might fit the needs of a business unit," says Levin.

Here's a look at a few other Microsoft Research projects:

  • "Shortstop" is a research project aimed at making alerts to mobile users "aware" of the recipient's status. It makes no sense, for example, to send a text message to someone driving on the freeway, but sending it while the driver is stopped at a traffic light is acceptable. To find out more about driving patterns, researchers gave 150 Microsoft staffers special GPS units that record their moves behind the wheel. To date, more than 37,000 traffic stops occurring over 19,000 mile of driving have been analyzed, says Microsoft researcher Muru Subamani.
  • SenseWeb is a framework that will be used to add real-time data to online maps. Researcher Suman Nath says that nearly any sensor that can be linked to the Web. For instance, a traffic camera or a thermometer can easily feed data to a mapping site by using software developed by his team. Microsoft will open SenseWeb fairly soon and will allow the public to add their own sensors to the site.
  • PinPoint enables people to use global positioning systems on mobile phones to find friends and family. Microsoft has built a server that tracks contacts and sends alerts to users when certain events occur. A parent, for example, might want to when a child arrives at school. The server maintains settings for alerts and security that users create from a desktop client. The phone can display maps, directions and alerts generated by the server, says researcher Rich Hughes.

Although Tuesday's exhibits focused on the Web-related efforts, Microsoft Research has its fingers in many other pies. "It would be hard to find a Microsoft product that was not touched by Microsoft Research," says Levin.

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