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Google Talking to Dell: It's All About Distribution

By - February 07, 2006

From the Journal: Default Lines Pressuring Microsoft, PC Makers Team Up With Its Software Rivals (paid reg)

From the article:

Google is in serious negotiations to get its software installed on millions of Dell PCs before they are shipped to users, according to people familiar with the matter. Under the deal being discussed, Google, of Mountain View, Calif., could pay Dell fees approaching $1 billion over three years, these people estimate. The terms might change and the discussions could fail.

….Already, a consumer setting up a new H-P computer, for example, has the option to sign up for Earthlink’s broadband access, AOL’s online service, Symantec antivirus software and videogames from a start-up company named WildTangent. Those companies pay H-P a set fee or a share of revenue, say executives at the companies. H-P also auctions off its space: Google pays it $1 for every PC that ships with a Google toolbar — a strip that sits atop a browser and enables users to easily operate Google’s search engine — and another 75 cents the first time a home-computer user taps the service, says a person familiar with the matter.

Under a scenario Google and Dell are discussing, Dell would set up PCs to run a few Google products straight out of the box, including software to search PC hard drives and its toolbar browser.

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9 thoughts on “Google Talking to Dell: It's All About Distribution

  1. Tom McCarty says:

    My new Dell laptop had the toolbar and the email and disk search already installed.

  2. WebTodd says:

    yet another reason Dell can keep prices so low. the more software included, the cheaper the price! i don’t mind it, so long as it’s very clear/obvious what has been installed on the computer.

  3. patil says:

    Google and NEC(Non Evil Consortium) partners are probably pooling in the money(upfront or on conversion of trial license into perpetual) and pushing the deal through GOOG-DELL channel. So its definately not $1.0 billion from Google’s pocket. Star/Open Office when included in the PACK will send someone sleepless in Redmond.

  4. MikeM says:

    Kind of confused how Gates is getting outflanked by “G” in every which way. Are they just fat and happy up in Seattle? Maybe they won’t go where the margins are so low?

    In some ways Google is reminds me of a strategy in the game of Monopoly where a player buys everything he hits. At some point the player has everything mortgaged and the outcome of his strategy becomes dependent on how the dice land.

  5. LevelHead says:

    You can’t overestimate the importance of these deals in terms of core search traffic and market share. It is a vicious circle for folks like Yahoo! and MSN — they can’t monetize the search revenue created from toolbar placements nearly as well as Google, so they can’t pay the PC partners nearly as much, so Google ends up on new PCs not just with the toolbar but also the other ancillary Google applications. This is important for Google, since they’re not willing to clutter up their basic search interface with promotions for those services, which means they need pre-placement to get any kind of decent installed base.

  6. This is such a bad idea, I have to wonder what else is behind it. And hope there *is* something else behind it. I mean, to spend real, BIG money to OEM free software when you are the world’s #2-in-reach site and can use it’s customer-directing capabilities *for free*? Huh? I get that they need to diversify revenue streams and be seen to be doing so, but jeez Louise this is nutty. Are they really saying that they couldn’t come up with any better way to get their product out there than writing a great big cheque? What does that say about (a) their existing service and (b) the product they are trying to distribute?

    If they were some two-bit tier-three player with a lousy product and desperate for distribution, well, maybe. But c’mon. These guys? This is ridiculous.

    — Stuart

  7. Boy it makes you really wonder why Yahoo never made Dell an offer like this. They once had a big jump over google…now look at them.

  8. Ralf Haller says:

    If I take my own habit and extrapolate to many others (not sure if I am representative though) then I think that only if the software is fully installed and also serves a clear purpose, I would keep it and even work with it. In the past there were so many software solutions either pre-installed or provided on a separate CD-ROM that shipped with the PC that I seriously doubt this was an effective distribution channel at all. While I said this, I still think Google will find a way to get a decent acceptance rate. The reason is simply that they have the resources to trial and error until it finally works.

  9. Todd Henley says:

    I recently got a new Compaq Presario laptop (really happy with it by the way) but I was not at all interested in most of the software that came installed on it. I would have much preferred some Google software, and Firefox of course.