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May 25, 2006

Google gets prime position on Dell PCs

Posted by David Hunter at 11:09 PM ET.

Ben Ames at Infoworld reports that Google knocks Microsoft off Dell PCs:

When consumers boot up their new Dell Inc. desktops and notebooks next week, they will find a Google Inc. homepage and search tools, not the familiar Microsoft Corp. versions, the world’s largest PC vendor confirmed Thursday.

Dell will factory-install the Google desktop, toolbar, search engine and homepage on desktops and notebooks shipping to consumers and small and medium-size businesses worldwide, said Dell spokesman Jess Blackburn.

It will also be installed on certain enterprise systems, unless the buyer specifies its own corporate software tools. Dell will begin shipping the new configuration by the end of May.

No financial terms were announced, but the original rumor had Google paying Dell $1 billion over three years.

But is it really a blow to Microsoft? Joe Wilcox demurs:

I don’t doubt the situation stated by the Journal: “People familiar with Google’s thinking have said the deal with Dell wasn’t designed exclusively to strike back at Microsoft, but rather to increase use of Google’s services.” Google has more to gain by making its own business objectives the priority than making deals against Microsoft. The sky isn’t falling, and Google isn’t looking to get Microsoft.

By contrast, Microsoft’s bigger business objective would appear to be about getting Google. Some friendly advice: Rather than launch zillions of new Windows Live products and services, Microsoft would be better off making the stuff it already sells much better and getting upgrades, like Windows Vista, out the door on time. I swear, too many Microsoft Chicken Littles grew up playing Risk when they should have learned Chess.

And is it even a good deal? Henry Blodget repeats his original criticism of the deal and if the $1 billion is accurate, it does seem rather pricey. Also interesting is how Google will determine the returns. How about a special cookie for preloaded Dell machines?

Finally, as I mentioned in the immediately prior post, one needn’t look for conspiracy in Dell selling their crop of eyeballs for as much as they can get in today’s sellers market. If Microsoft really wanted to keep Dell on board, they could always have paid even more. In the meantime they can can always use it for Windows antitrust insurance – again quoting Joe Wilcox:

By the way, deals like this would have been nearly impossible before Microsoft’s US antitrust case. The landlord (Microsoft) covets his property (Windows). He doesn’t like redecoration (changes to the desktop) or subletters (the likes of Google software or services bundled instead of Microsoft stuff).

Filed under Antitrust, Coopetition, Dell, General Business, Google, Governmental Relations, Legal, Microsoft

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6 Responses to “Google gets prime position on Dell PCs”

  1. Ballmer’s take on Google’s Dell deal -- Microsoft News Tracker Says:

    [...] Todd Bishop spots a Steve Ballmer response at yesterday’s Sanford C. Bernstein investment conference that confirms my take on Google’s Dell deal: “The cost of online customer acquisition is going up. I think I had a little footnote there. And everybody has got to decide at what level they want to pay–play, pay to play. So that was–bravo. … “This is a case where you could say we decided that the return to our shareholders was not there in the business deal that could be done.” It may be a seller’s market in eyeballs, but the buyers needn’t go nuts. On the other hand, while I’m patting myself on the back, perhaps Mr. Ballmer is merely covering up his chagrin. Filed under Executives, Coopetition, Steve Ballmer, Google, Dell, Microsoft   [Permalink] [...]

  2. Verizon to offer co-branded Windows Live services -- Microsoft News Tracker Says:

    [...] It’s the same audience building idea as putting links to your online services on new PCs or in Vista. Interestingly, Verizon currently offers MSN Premium free to their subscribers and that will continue. Filed under Coopetition, MSN, General Business, MSN Premium, Windows Live, Online Services, Windows Live Messenger, Verizon, Windows Live Search, Windows Live Mail, Windows Live Toolbar, Microsoft, Windows Live OneCare Safety Scanner   [Permalink] [TrackBack] [...]

  3. Yahoo corrals HP PC buyers -- Microsoft News Tracker Says:

    [...] First it was Google and Dell, now it’s Yahoo and Hewlett-Packard: Yahoo Inc. said Thursday it has struck a deal with Hewlett-Packard Co. to plant its Internet search engine on millions of computers, the latest volley in a high-stakes battle with Google Inc. and Microsoft Corp. [...]

  4. Microsoft snags Sprint for mobile search and more -- Microsoft News Tracker Says:

    [...] It’s fundamentally another eyeball auction only instead of a content site like MySpace, a PC manufacturer like Dell, or an Internet service provider like Verizon, it’s a mobile phone service provider. Microsoft presumably has a leg up on the competition in that arena with the providers like Sprint who are already using Windows Mobile to power their phones. Filed under Alliances, Coopetition, Windows Mobile, Google, General Business, Yahoo, Windows Live, Ad-supported software, Windows Live Local, Windows Live Search, Windows Live Mobile, Microsoft [...]

  5. Microsoft replaces Google in Lenovo eyeball auction -- Microsoft News Tracker Says:

    [...] It’s another one of those computer vendor eyeball auctions, but unlike with Dell, Microsoft beat Google on this one – Microsoft Toolbar to Go on Lenovo Computers: The Microsoft Corporation reached an agreement on Tuesday with the Lenovo Group to pre-load Lenovo computers with a toolbar of Microsoft’s Windows Live online services including Web search, the two companies said. [...]

  6. Live Search nabs the North America HP IE search preload contract from Yahoo | Microsoft News Tracker Says:

    [...] Danny Sullivan has a nice table of PC OEMs, their US market share, and the search engine they have signed up with and adding HP clearly is a leg up for Microsoft since HP is a strong number 2 (24%) to Dell (31%) who signed with Google in 2006. Before this HP deal, Microsoft only had Lenovo whose US share was minimal. [...]

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