Microsoft joins the desktop search party.
MSN seems to be using Lookout (a company they acquired) for much of their desktop search. Yahoo is licensing X1's desktop search. AOL will be using Copernic. Only Google decided to build their own.
MSN's entry is a little amusing since, aside from searching your browsing history, seems like most of what they're doing is just fixing the miserable file search functionality built into WinXP and MS Office products.
I do find the hype behind desktop search mystifying. You're searching a few thousand files and e-mails on a desktop box . The major problem is grokking thousands of different file formats, painful, sure, but not exciting. With web search, it's the scale -- billions of documents -- makes the problem interesting.
That being said, there is some interesting innovation going on in desktop search. Dashboard, and Blinkx are trying to do personalized information retrieval. They have early, first steps toward making your computer figure out what you are doing and what information might be helpful for that task. Very cool.