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Will Hanging With HP Spread Microsoft's Search

Microsoft surprised the search world two weeks ago by saying it would pay advertisers and consumers for using its search engine. Now, it's doing something a little more traditional -- bundling its search engine with new consumer PCs.

Microsoft and HP announced Monday that the computer maker's 2009 consumer PCs will come with a Silverlight-based version of the Microsoft Live Search toolbar preinstalled as the default search engine.

"Microsoft has introduced a new compelling toolbar product... which HP now can roll out on our consumer machines in North America," Ulf Claesson, vice president and general manager of HP's Global Attach business, said in an e-mail to InternetNews.com.

That could give Microsoft (NASDAQ: MSFT) a leg up on search leader Google, as well as on Yahoo, if enough users adopt it. According to tracking firm comScore, Microsoft delivered less than 10 percent of all U.S. searches during April -- less than half of Yahoo's and a mere sixth of Google's traffic.

But with HP's strong position in PC sales, greater traction for Microsoft's search may be likely. In 2007, HP pulled ahead of Dell to claim the top spot in the most PC shipments worldwide -- 49.4 million as opposed to 38.7 million for Dell, according to Gartner.

While the move is bound to boost Microsoft's share in search, though, one analyst labeled the announcement as important, but not likely to dramatically affect the company's standings.

"It's a significant win but it's not something I would call a game-changing event either for HP or Microsoft," Charles King, principal analyst at Pund-IT, told InternetNews.com, adding that he didn't want to "overemphasize" the deal's importance.

One remaining question is whether or not the move will rile Google up enough to complain to the U.S. Department of Justice as it did last year regarding Windows Vista's inability to let users designate a different default search engine for desktop search. Microsoft opened Vista to other desktop search engines with the release of Vista Service Pack 1 this spring.

Microsoft said in a statement e-mailed to InternetNews.com that HP made its decision in a fair bidding situation.

"This was a standard RFP [request for proposal] process which we competed in and won. This deal is no different than similar agreements that other search engines have with other PC manufacturers," the statement said.

Indeed, Dell announced a similar deal two years ago to preload Google's search Toolbar and Desktop on its PCs.

Google representatives were not immediately available for comment.

King, though, doesn't think that simply being the default search toolbar will necessarily make Live Search dominant, unlike the face-off in the 1990s between Netscape and Microsoft that resulted with Internet Explorer controlling more than 90 percent of all browser share for nearly a decade.

"It's not a be-all, end-all deal like it was during the browser wars," King added.

The average consumer is much more computer-savvy today, and users often think nothing of uninstalling something like a toolbar, he said.

Through the deal with HP, Microsoft's custom Live Search toolbar will incorporate its Silverlight cross-browser, cross-platform streaming media technology.

Microsoft has already demonstrated a version of Live Search with Silverlight incorporated with it. Last summer it began a beta test of a site it calls Tafiti, that combines the two. The name means "do research" in Swahili.

Additionally, Microsoft is targeting Adobe's Flash and Apple's QuickTime media players with Silverlight.

A greater foothold in search, however, appears to be the core benefit of the deal for Microsoft. The company has been struggling for years to make headway against competitors Google and Yahoo, without much luck.

In April, for instance, comScore found Google served up 61.6 percent of all Web searches in the U.S. That compares to 9.1 percent for Microsoft and 20.4 percent for Yahoo -- which jilted the software giant when it tried to acquire the number-two player earlier this year.

In the meantime, Microsoft and Yahoo have both been slowly but steadily losing market share to Google, according to the firm.

One way to reverse that slow slide is to get consumers excited about using Live Search, and Pund-IT's King thinks that combining search with the high-quality media streaming capabilities of Silverlight at least gives Microsoft a shot.

"You can have the greatest three-ring circus in the world, but if you can't get the customers into the tent, it's not worth anything," King said. "This could be Microsoft's opportunity to get them [customers] into the tent by showing them how good it really is."



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