MSN have been very open in saying that they have missed the boat on search but are aiming to catch up. This is not the first time the company has done this - look at how they responded to the internet and turned the company on a dime in repsonse to changing market conditions.
So, if they know they were slow, why haven't they gone out their and bought someone? Maybe they did or didn't make a play for Google but why not go after someone else?
I have been having a few thoughts about this and have come up with the following:
Microsoft's Eat Their Own DogFood Approach
With majority of SEs out there running on Linux or Unix technology, they are not going to be that attractive from a technology point of view. From an IP and Patents point of view they would be. But for a company who is facing the battle of the *nixs, what better proof of concept of Windows in a data centre than a search engine?
SharePoint Portal Server
Whilst a nice pretty product that tries hard to be a document management system but isn't quite there, it does have a really good relevancy algorithm for looking at documents of a known type i.e. DOC, XLS, PPT etc. The alogorithm was devised in the Microsoft Research Lab by a few PhDs and won aclaim when it was released. So they at least have a foot in the door for building the relevancy algorithm.
Development Team and Deep Pockets
When you have deep enough pockets, you can afford to throw warm bodies at a problem and hire some very important people. I would be expecting to see some "big name" hires in the future (if not already I may of missed them).
MS has several different storage technologies to adapt to for use - SQL or Outlook WebStore. Another solid-ish foundation to build from, that they are farmilar with. And again - another proof of concept for scalability.
So combine these things with:
Hailstorm / Passport to give you personal search
Smart Tags to do searching from a document
Ownership of both the desktop and the browser giving you an untapped market
MSN are going to be a serious player - maybe not in the first release but subsequent releases.
I also come back to, what is MS good at doing? Taking a product, making is simple and easy to use whilst increasing the number of features and options and all the time making a lot of money out of it.