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Microsoft's service has been dubbed 'Virtual Earth' based on the Terraserver satellite data that Microsoft Research has been sponsoring for many years.

Virtual Earth is similar to 'Google Earth' which is said to be due out in a few weeks. Google Earth is a rebranded version of the Keyhole satellite based 3D mapping service that Google bought last October.

Google Earth, unveiled by Sergei Brin last week, will offer high-resolution three-dimensional images in some urban areas as well as driving directions.

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Local search is considered a huge untapped market by all three of the big search companies. The thinking is that there are tens of thousands of small businesses that serve local communities. These firms often do not have a web site and are not equipped to service requests outside their immediate area. The search engines are targeting these companies by providing various ways in which they can offer services through online search.

Although Yahoo! was the first to offer a comprehensive local search service in October 2004, Google Local has been running hard to catch up. MSN currently has no local search facility at all and as such is a glaring hole in its service.

Microsoft estimates that the service will roll out in the US sometime in the third quarter of this year. No date for a British service, however, has been announced.