updated 1/26/2006 6:05:01 PM ET 2006-01-26T23:05:01

Microsoft Corp. is creating a research lab devoted solely to developing Internet technology, as part of efforts to move products to market faster and better compete with rivals such as Google Inc.

Microsoft Live Labs, announced late Wednesday, will be a partnership between Microsoft's MSN Internet product group and its research arm. Unlike traditional Microsoft Research labs, which are given leeway to take on academic-type research into far-flung fields, the goal of Live Labs is to create new products and tough competitors. (MSNBC.com content is distributed by MSN. MSNBC itself is a Microsoft - NBC joint venture.)

Microsoft hopes the collaboration will result in useful products that are also cutting-edge, said Gary William Flake, a Microsoft technical fellow who will head up the project.

"Its goal is to hit the sweet spot in the middle between science and engineering, where each is ... better together," he said.

The move comes as Microsoft is facing intense competition from companies including Google Inc. and Yahoo Inc. in Internet-based business and consumer applications. Microsoft has been criticized for lagging behind in key areas such as search technology, and some have questioned whether its massive size has inhibited it from moving nimbly enough in such a rapidly changing technology sector.

Seeking to rebut those criticisms, Microsoft last year announced a major strategy shift to focus on Internet-based software and services. The goal of the shift, which includes initiatives dubbed Windows Live and Office Live, are to create online products to complement cash cows such as its Windows operating system and Office business software.

Microsoft also said Wednesday that it was creating a related organization, Search Labs, to focus solely on improving methods for Internet search. Earlier this month, Microsoft also unveiled adLab, a research effort focused on the lucrative field of Internet advertising.

Matt Rosoff, an analyst with independent researchers Directions on Microsoft, said the moves aren't unusual in that Microsoft has been forging closer relationship between its researchers and its product groups, in the hopes of cashing in on the work of some of its brightest minds. But he said the fact that the company is putting so much emphasis on Internet technology shows that it doesn't want to again be in the position of missing the boat on the next round of online technology advances.

"This indicates Microsoft's long-term commitment to this (field)," said Michael Gartenberg with Jupiter Research. "Certainly they're not content with their position in the marketplace."

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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