Microsoft is offering iPod nanos, shuffles, and touches as prizes to promote their Live Search in Australia, according to the Brisbane Times on Wednesday. Microsoft is working through a joint venture in Australia with Nine Network, ninemsn, for Internet search.

Microsoft said that using a competitoris products in this way is frowned upon. However, the Zune is not available in Australia. "Where we donit have a great product or we donit have a product at all thereis no internal edict that says weire not allowed to use competitor products," a Microsoft source said.

The company is also is offering large discounts on Windows Mobile-based smartphone so keep staff from buying iPhones, the Brisbane Times reported.

Microsoft has been working hard to compete against Googleis search and its corresponding revenue stream. Ninemsnis head of Live Search, Alex Parsons, said "Iim not going to sit here and tell you weire going to win this in the next year or two years -- thatis not my objective."

Microsoft appears to be relegated to taking the long view. Mr. Parsonis compared Google to Hoover vacuum cleaners. "I read about when Hoover was vacuum cleaners -- Iid like to see what sort of market share Hoover has now against Dyson and some of the German brands," he said.

Compared to last year, Google searches grew 14 percent in Australia while MS Live Search grew 11 percent. MS may need need to be very patient -- while they keep giving away iPods.