What's next on Microsoft's search agenda?

It's been three months since Satya Nadella took over as Corporate Vice President in charge of Microsoft's Search & Advertising Platform Group. Nadella shared what's coming next from Microsoft, starting with the fall Live Search update.

It's been three months since Satya Nadella took over as Corporate Vice President in charge of Microsoft's Search & Advertising Platform Group. What's he been up to?

Microsoft’s Search & Ad Platform Chief Satya Nadella
"I've been focusing on learning," said Nadella, with whom I had chance to chat on July 27 at his office on the Redmond campus. "I had been with MBS (Microsoft Business Solutions) for a while and had forgotten what it means to change groups here. But I've been focused on building the team with a focus on collaboration."

Nadella, who was named as the head of Microsoft's combined Search and Ad Platform Group in March 2007, also is shepherding his team through a planned fall Search update, as well as an upcoming Spring search refresh. Nadella said his goal is to do a major search refresh twice a year, once in the spring and once in the fall, for the foreseeable future. In between these updates, Microsoft will continue to roll out incremental search improvements, such as the new facial-detection search functionality it recently added to its Live Image Search.

Nadella said the areas where Microsoft can innovate in search fall into three primary buckets:

1. Core: Microsoft will improve search relevance -- not just by tweaking the search algorithm, but also by tuning the data platform and mining, he said. "We believe we can compete with anyone on relevance," Nadella said.

2. User Experience: Microsoft has 55 million searchers. (Google has twice that many, according to Nadella.) The question is "how to get searchers to search more with us," Nadella said. Promotions like the give-aways by the Live Search Club are hardly the only strategy Microsoft has up its sleeve here.

Watch for Microsoft to promote search more on MSN.com via categories like "Popular Searches," "A List" searches, etc. "We are looking to use MSN as both a portal and convenience search vehicle," Nadella said. Also expect Microsoft to find ways to make Search more immersive (like it is today on Virtual Earth, where user sessions run, on average, 10 minutes; and strike more search syndication deals in verticals like legal, travel, etc.

3. Integration: Microsoft also is working to integrate its search results, search application-programming interfaces (APIs) and search engine into existing Microsoft properties. This means everything from integrating Local Search with Microsoft Outlook, to making Live Search the engine that powers Office Live, Nadella said. "We have a set of APIs today that you can take, and (you can) use our search results with any other property or application," he said.

I asked Nadella whether he was worried about Google or other search competitors suing Microsoft if the company integrates more of its search technology into existing products. After all, Google was threatening to do just that, regarding Microsoft's decision to integrate desktop search into Vista. Sadella's response: "There is nothing stopping Google from integrating search" with other existing applications and properties. " They are not as much about opening up their APIs as we are," Nadella claimed. Microsoft and Google are companies with different business models and strategies, he said.

Nadella, like many other top Microsoft execs, also is laser-focused these days on the advertising market and growing Microsoft's footprint there.

"We've really good out strategy and pieces all in place now," Nadella said, the day after Microsoft announced it had bought AdECN, a display advertising broker.

And because advertising is based around a "platform" -- in this case, Microsoft's adCenter online-advertising platform -- Nadella, with his own platform heritage, has a grasp on how to build atop and around it, he said.

"The ad platform is like a big, hulking database with things like millions of real-time auctions," Nadella said. And more Microsoft software and services, like the next version of Microsoft Works, are going ad-funded, he added.

Do you think Microsoft is finally on the right track with its search and advertising businesses and strategies? Or do you see any obvious holes in the Softies' search approach?