Today, Microsoft will release a new online local search product that goes head to head with a similar offering from rival Google.

MSN Virtual Earth, first announced in May, is similar to Google Maps in that it provides both street-map and satellite views of locations and provides driving directions between places.

Like Google Maps, Virtual Earth also allows users to find specific consumer services around a particular location, such as restaurants and hotels, by typing in keywords.

Virtually WiFi

In a later release of the product expected to come out before the end of September, Microsoft also will add a "bird's eye" view of locations that lets users view aerial images not only from directly above but also from an angle, so they not only see the tops of buildings but also view them from the side, said Mark Law, lead product manager for Virtual Earth. Google Maps does not have that capability today.

Another feature Virtual Earth has that Google Maps does not is the ability to pinpoint the location of a user on a WiFi network by using the WiFi access points nearby, Law said.

Through a client application called Microsoft Location Finder that can be downloaded when a user clicks a "Find Me" icon in Virtual Earth, Microsoft accesses the MAC (media access control) addresses of wireless access points that a user's device can reach, whether or not the user is logged in to any of them, he said.

Microsoft has worked with third parties to assemble a database of router MAC addresses and the latitude and longitude of those access points. Location Finder finds the access points in the database and then triangulates the location of the user's device based on the signal strength of those access points, Law said.

This location-finding service works best in urban areas where there tend to be a heavier concentrations of wireless routers than in more rural locations, but Microsoft has assembled a fairly comprehensive database of wireless access points throughout the US, Law said.

Are you local (search)?

Joseph Laszlo, research director for Jupiter Research, said the WiFi location technology in Microsoft's search product will be especially helpful when a user is accessing the search tool from a small-form-factor device such as a mobile phone or a personal digital assistant (PDA).

"It's a really important thing with smaller devices," Laszlo said. "It can take much longer on a PocketPC device or cell phone to type out [your location]. If and when [Microsoft] extends this technology to mobile devices, it may be more important as a differentiator."

Local search has been a gaping hole in the MSN search engine. In addition to Google, major search engine providers Yahoo Inc., Ask Jeeves and America Online also have local search tabs on their search Web sites.

Local searching is becoming increasingly popular with users and online advertisers. It lets users find business listings and complementary information from a specific geographical area, while advertisers are able to aim their ads at those who are looking for services and products in their vicinity.

Jupiter's Laszlo suggested that Virtual Earth is one way for Microsoft to level the playing field in the search market as a whole by gaining users' attention.

"The theory is, if you can do really well at this particular fight - helping people navigate geographically where things are - you might win over more of a search customer, someone looking for something that's not as geographic," he said.

Bill’s big idea box

Google released Google Maps in February, a time when Law said Microsoft already was working on Virtual Earth as the result of an idea sent to what he called the "world's coolest suggestion box." He explained that every year at Microsoft, employees can suggest a product or an idea they think should be developed and have the opportunity to present it to Microsoft chairman and chief software architect Bill Gates.

The idea for Virtual Earth found its way to Gates last fall. He decided in February 2005 that the product should be ready for launch by July, Law said.

Virtual Earth is not an entirely new concept for Microsoft. The product uses technology from its MapPoint product as well as from TerraServer, a database of satellite images Microsoft has had for about ten years.

Though Virtual Earth is limited to searching within the US only in the first version, Microsoft will add the ability to search international locations in future versions of the product, Law said.

In the next six months, Microsoft also plans to expose Virtual Earth as a Web service that will allow businesses to use the search tool on their Web sites, he added.