Microsoft is expected to unveil a new version of its Internet search engine this week, The Wall Street Journal reported.
The newspaper said the US software giant would demonstrate its new search engine publicly for the first time at the "All Things Digital" technology conference in California next week sponsored by the Journal.
Microsoft has been testing a new search engine code-named Kumo in a bid to increase its share of the lucrative search market currently dominated by search and advertising giant Google.
Google increased its share of the US online search market in April while Yahoo! and Microsoft both lost ground, according to the latest figures from tracking firm comScore.
ComScore said that 64.2 per cent of the searches conducted by Americans in April were at Google sites, up from 63.7 percent in March.
Yahoo!'s share of the search market slipped 0.1 percentage points in April to 20.4 percent while Microsoft saw its share fall by 0.1 percentage points to 8.2 percent.
The journal said Kumo is designed to cut down on the length of typical Web searches by grouping the results into categories.
A search for a particular model of car, for example, would be separated into categories like parts, used car listings, online discussion forums and videos showing the vehicle, it said.
The Journal said Microsoft planned a major advertising campaign to promote the new search engine.
The newspaper also said that Microsoft and Yahoo! were continuing talks on a potential search partnership.
It said the companies have been discussing a deal in which Yahoo! would sell its Web search and search advertising technology to Microsoft, in exchange for an up front payment and some share of the revenue of the search ads it shows on Yahoo!