For all the excitement about Microsoft Live Search Cashback, I think a new announcement out today is far more important to Live Search’s potential growth. It will be the default search engine on Hewlett-Packard computers sold in North America beginning in January 2009, winning the deal from Yahoo. HP is currently the world’s largest PC manufacturer and second largest in the United States. Below, more about the deal plus a review of all major computer-search deals.
HP computers will have a special HP-edition Live Search toolbar as part of the Internet Explorer browser they ship with. Aside from providing links to key HP services, the toolbar will include a search box set to use Live Search by default. The toolbar will also put Microsoft’s Flash-rival Silverlight on the computers.
Microsoft says the distribution deal is the most "significant" that they’ve ever done. While many assume that Microsoft already has a natural advantage in the browser since it makes Internet Explorer, it is not the default choice for a "clean" computer. Instead, to please the US anti-trust authorities, consumers must select from one of several choices.
The exception is when the PC maker itself has cut a deal for the default option. Until now, I’d say Google had been the leader in arranging such deals. Probably most well-known is Google’s deal with Dell that was cut in 2006 and which produced some controversy last year because of how Dell pointed people hitting errors to pages dominated with Google ads (see Google & Dell’s Revenue-Generating URL Error Pages Drawing Fire for more).
Microsoft has said the price of fighting Google for Dell was too high. It’s not disclosing how much the HP deal cost. But given the billions it was prepared to spend on acquiring Yahoo, I’d assume it’s willing to pay much more for distribution these days.
Worldwide, HP is ranked the top PC maker. However, today’s deal is for North America. In that area, at least according to US-specific figures, Dell is still slightly ahead. Here’s a look at figures for the first quarter of 2008, according to IDC, with search partnerships appended:
|Dell||30.9%||15.7% (2)||May 2006|
|HP||24.3%||19.1% (1)||Microsoft||June 2008|
|Acer||8.7%||9.9% (3)||Yahoo||Sept. 2006|
|Toshiba||5.2%||4.4% (5)||Jan. 2007|
|Lenovo||-||6.9% (4)||Microsoft||March 2007|
Dell, as mentioned, is partnered with Google. You can see an example of the Google Dell start page here.
HP previously was partnered with Yahoo in North America, in a toolbar deal signed in September 2006. Microsoft snags that away from Yahoo. The Yahoo deal to power Yahoo start pages for HP owners in Europe apparently continues.
Acer is partnered with Yahoo for global distribution. You can see a Yahoo Acer start page here. However, Acer acquired Gateway and Packard Bell in October 2007. Google had a preexisting deal (PDF file) from November 2006 with Packard Bell that continues, with the Packard Bell start page here. Gateway also has a start page here, also through a November 2006 partnership, through it’s not clear if this involved desktop integration.
Apple put Google into the Safari browser way back in 2003, but I can find no references to a formal deal being announced. However, after spending time with Google’s press area today, the company seems not to announce such deals. Perhaps this is to avoid bringing consumer attention to the fact that Google is buying its way onto desktops. Google also has other deep integration with Apple, such as what our Apple Continues To Integrate Google (& AdSense) Into Software article from last August covers. Google CEO Eric Schmidt, of course, is also part of Apple’s board of directors.
Lenovo is partnered with Microsoft, which ousted Google as Lenovo’s previous partner. Despite the Microsoft deal being signed in March 2007, Lenovo still cut a deal with Google in August 2007 to use Google as a partner for its Beijing 2008 Olympic Torch Relay project.
Toshiba is partnered with Google through a deal that was expanded in January 2007.
While the deal is good for Microsoft, you can expect that Google will try to entice HP users away from their default settings. So will Yahoo. And Ask, for that matter. Microsoft Live & Yahoo Push For Firefox Users, Plus Revisiting The IE7 Search Battle from last year illustrates some of the ways search engines prompt users to change settings — something that continues on today.
Also see Firefox: Google’s Secret Weapon Against Microsoft?, which covers how Google has purchased its way into being the default choice for Firefox when distributed outside of Asia. Google: As Open As It Wants To Be (i.e., When It’s Convenient) covers the irony here – that Google pushed a "consumer choice" line when it came to Internet Explorer but doesn’t push that when the choice is in its favor in Firefox.
Distribution deals with PC vendors — as well as within browsers or with ISPs – have been around for years as the players try to gain or maintain share. So, too, have been the attempts to break defaults with pop-up suggestions and other methods. As long as consumers clearly understand that they are making a change, I can accept these. I just hope we don’t get back to the days when it is not made clear that a switch is happening.
It would also be nice if computer makers disclosed to purchasers the reason why the defaults are the way they are. From Microsoft’s release today, HP says:
This agreement provides HP customers with an outstanding search product in Live Search, as well as a user-friendly, fully customizable way to access their favorite online services,” said Ulf Claesson, vice president of Worldwide Attach at HP. "Microsoft shares HP’s passion for delivering world-class technology to consumers in meaningful ways, and today’s announcement will help to provide an even more personal computing experience for HP customers."
It fails to mention that HP will gain cash through the deal for effectively selling out their users. That’s not to single out Microsoft. The Google-Dell deal is exactly the same situation. Yes, in both cases, the computer owners are getting access to good search resources. But maybe the vendors should charge less for computer where they benefit by choosing for the consumer? Or maybe they need to disclose more fully why the defaults are the way they are?