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For years, Microsoft has been trying to beat Google in the search engine business. The software company has tried various strategies -- redesigning its search engine, pouring boatloads into search engineering, offering to buy Yahoo, and now, according to reports, it's discussing a deal to purchase only Yahoo's search engine. Nothing's worked; Google now conducts two out of every three Web searches, and its share is growing, while Microsoft's is declining.

But today Microsoft is launching a new search initiative that's sure to prompt you to think twice about sending your search Google's way. That's because Microsoft is finally deploying the one asset it has in spades, a thing no sane-thinking person can turn down: Microsoft will give you money to use its search engine.

No, I'm not kidding. This is the real deal. Microsoft's new slogan is, "The Search That Pays You Back!" And even if it sounds a tad desperate, it is also kind of brilliant. I've already saved money with it, and you can too.

Microsoft's new search engine, called Live Search Cashback, is similar to Google's Product Search engine. You use it primarily to search for the best price on something you're looking to buy.

When you type your query -- "toaster," "iPod," "Wii Fit" or whatever else -- into Google's version, you get back a list of online stores that carry the thing, organized by price.

Microsoft's new search engine does one better: It tells you which stores carry the product and each store's price, plus any additional charges (shipping, taxes). And on top of that, the search engine offers a discount of 2 or 3 or 5 percent, depending on the store you choose. If you decide to buy the item from one of the listed stores, Microsoft will deposit the discount into your account.

Think of it like a credit-card rewards program, one that pits online retailers against each other in a fight to give you the biggest reward. If it takes off, it could be a boon for customers, not to mention MS, which takes a cut of the transaction.

I've tested this thing out for a less than an hour, but already, I've found discounts here that I wouldn't have found through Google.

Take, for instance, a search for the 16GB iPod Touch. When I do that search at Google, I'm presented with this list of online stores that sell the Touch. The lowest price is at a shop called Blue Bay Electronics -- $325.95.

Trouble is, Google doesn't tell me either the shipping price or taxes at Blue Bay. I've got to click the link to see that info -- and when I do, I find that actually, Google's search was wrong. Blue Bay's 16GB iPod Touch goes for $334, not $325.95, plus it wants $2.49 more for shipping. Bottom line: $336.49.

Microsoft's Live Search Cashback makes the same search far easier. Here's Microsoft's results page for the 16GB iPod Touch. The lowest price here is at B&H Photo, $339.

But Live Search Cashback also tells me that B&H Photo will charge me nothing extra for shipping and taxes. There's one more thing: Microsoft will give me a reward of 2.5 percent, or $8.47, if I buy the Touch from B&H. Live Search Cashback combines all these figures into a single "Bottomline Price": $330.52 for the iPod touch. I save $6 over Google.

Will you save money on every product? It's hard to know. For a given search, Live Search Cashback lists far fewer online stores than does Google Product Search, so it's possible Google may have lower prices on some products.

But because Microsoft lists extra charges and gives you a discount, Live Search Cashback is certainly worth checking out first every time you're looking for something to buy online. If people take to it, the engine could become quite lucrative for Microsoft.

I'll confess, when I first heard that Microsoft wanted to give people money in return for searching at its site, the idea sounded too gimmicky by half.

Instead of beating Google on the quality of its product, Microsoft seemed to want to out-market Google -- I couldn't help recalling that dot-com era portal iWon, which made using a search engine something like gambling.

But Live Search Cashback isn't a gimmick at all. By giving me more information, and by passing money from retailers to me, Microsoft is fighting Google on very Googly terrain: usability, and the quality of search results.

It's a smart strategy, and, at least for you and me, it's very rewarding.

(taken from : http://machinist.salon.com/blog/2008/05/21/microsoft_cashback_search/index.html?source=rss&aim=/tech/machinist/blog)