Microsoft Strikes Search Deal With HP

Having recently launched a cash rebate scheme to encourage Internet searchers to choose Windows Live Search over the competition, Microsoft on Monday moved to make search engine selection even easier for consumers by making the choice for them.

Microsoft said that it struck a distribution deal with Hewlett-Packard, the world's largest PC manufacturer, to install a Live Search toolbar on all HP consumer PCs in the United States and Canada starting in January.

"This agreement with HP is a strategic indicator of our increased focus on securing broad-scale distribution for Live Search," said Kevin Johnson, president of Microsoft's platforms and services division. "This is the most significant distribution deal for Live Search that Microsoft has ever done, and we are very pleased to be partnering with HP to help bring Live Search to millions of consumers across North America."

HP shipped 3.9 million PCs in the United States in the first quarter of 2008, according to IDC. Turning all HP PC buyers into Live Search users would be quite a coup for Microsoft, but it's likely that many customers will change the default search engine to Google or Yahoo. It's doubtful, however, that such a change will affect the search box associated with a Live Search-branded toolbar, which is separate from the search box associated with the user's Internet browser.

Microsoft Windows Live Search received 9.1% of the Internet searches conducted in the United States in April, according to Internet metrics firm ComScore. Google received 61.6% of U.S. searches during the same period.

The Microsoft-HP deal may increase usage of Live Search, even though Live Search is already the default search engine for Windows Vista. It's likely to have a more significant effect on Microsoft's effort to make its Silverlight rich media technology, which competes with Adobe's Flash and Flex, indispensable.

The arrangement also presents monetization opportunities for HP by providing toolbar buttons that can be linked to online services -- for an appropriate fee, of course. HP plans to use one such button to promote its own Snapfish online photo service.

Search distribution deals have long been an area of contention between Microsoft and Google.

Google struck a search distribution deal with Dell in 2006 that put its search software on Dell PCs. It also struck a toolbar distribution deal with Adobe that year. Given Dell's rivalry with HP, Microsoft's decision to partner with HP appears to be motivated at least in part by the coziness between Google and Dell.

Such jockeying for position has occurred not only on PCs and mobile devices, but also within the Windows operating system. Last year, Google filed a confidential antitrust complaint with the Department of Justice asking for changes in the way that Microsoft's Windows Vista desktop search works. Google's concern was that Vista's desktop search interfered with Google's desktop search application. In June 2007, Microsoft said it would change the way Vista's desktop search worked to address Google's concerns.

Expect the turf war to continue.