Microsoft Forges Deals to Challenge Google's Dominance

Strategic Insights -

In a renewed effort to crack Google's dominance in the search engine market, Microsoft has announced deals with Dell and Verizon Wireless to make its search engine the default software on most of their products. The three-year contract with Dell will put Microsoft's search program on the company's personal computers by next month, while the five-year agreement with Verizon will use Microsoft's search engine and related advertising on the cellular operator's services. This move comes after Microsoft's failed attempt to buy Yahoo, the second-biggest search site, last year.

Key Takeaways:

  • Microsoft has signed a three-year contract with Dell to make its search engine the default software on most of Dell's personal computers, with the program to be installed by next month.
  • A five-year agreement has been reached with Verizon Wireless to use Microsoft's search engine and related advertising on the cellular operator's services.
  • The deals aim to increase Microsoft's market share in internet queries, which currently stands at one-seventh of Google's.
  • Microsoft has also partnered with Hewlett-Packard and Sun Microsystems in the past.
  • David Card, an analyst at Forrester Research, notes that Microsoft needs to get more eyeballs to compete with Google, and that the deals are a good start.
  • Microsoft chief executive Steve Ballmer has emphasized the importance of innovation during economic downturns, stating that companies that continue to pursue innovation will position themselves better than those that pull back.

Statistics:

  • Microsoft has one-seventh of Google's market share in internet queries.
  • Dell is the second-largest PC maker.
  • 2006: Dell signed an agreement to preinstall Google's tool bar on its machines.
  • 2009: Microsoft failed in its attempt to buy Yahoo, the second-biggest search site.
  • 2009 (current): Microsoft's search engine market share is 1/7 of Google's.

Sources:

  • Forrester Research
  • Microsoft press release announcing the Dell deal
  • Microsoft press release announcing the Verizon deal
  • Alltel press release on Verizon's acquisition of the company
  • Hewlett-Packard press release on Microsoft partnership
  • Sun Microsystems press release on Microsoft partnership