by , 4:45 PM EDT, July 2nd, 2008

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 competitor's products in this way is frowned upon. However, the Zune is not available in Australia. "Where we don't have a great product or we don't have a product at all there's no internal edict that says we're 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 Google's search and its corresponding revenue stream. Ninemsn's head of Live Search, Alex Parsons, said "I'm not going to sit here and tell you we're going to win this in the next year or two years -- that's not my objective."

Microsoft appears to be relegated to taking the long view. Mr. Parson's compared Google to Hoover vacuum cleaners. "I read about when Hoover was vacuum cleaners -- I'd 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.