Microsoft challenges Google with Virtual Earth

Microsoft is playing catch-up to rival Google with the release of a beta world mapping service, MSN Virtual Earth.

Virtual Earth is a wrap up of a number of location-based services, including mapping of the world's surface, map annotation and location save and share features - echoing Google's Google Earth released last month. The Redmond giant has also combined road mapping with aerial photography - as has Google.

However, Microsoft has also released a separate client-side application, Microsoft Location Finder, which integrates with MSN Virtual Earth and allows a user to pinpoint their own position by means of signals from wireless networks.

Location Finder, which works with Wi-Fi-enabled tablet PCs, laptops and PDAs, detects the MAC (media access control) address - the unique signature - of each network address and correlates that information with its own location database to determine a user's position.

Microsoft has also set up a developers' area to encourage coders to build additional functionality around the geo-locating service.

The service is likely to have limited usefulness at present, with just north America mapped out, although Microsoft is reportedly looking into mapping other areas including the UK. Location Finder will also only be of use in urban areas, where Wi-Fi density is highest.

Dean Bubley, of research firm Disruptive Analysis, said that accuracy could also be a problem, unless Microsoft has unlimited budget "to drive a car with logging equipment around every street, in every city, in every country and repeat that once every few months".

Although the software would not be accurate enough for emergency services to locate an individual, Bubley said the system did have some advantages. "I would imagine it's cheaper to do that than do a cell ID look up [with a mobile operator]," he said. "With GPS, you need to have an uplink and it doesn't work too well indoors. With Wi-Fi, that's presumably where you are."

A Microsoft spokesman said using Wi-Fi, Location Finder will be accurate to between 50 and 200 feet.

Microsoft seems to have joined the location-based services market at the right time. Analyst Berg Insight is predicting 153 per cent growth in European revenues alone this year, to €274m. The key driver will be navigation services, it said.