SEATTLE (Reuters) – Microsoft Corp (MSFT.O: Quote, Profile, Research) struck a deal with the world’s largest personal computer maker, Hewlett-Packard Co (HPQ.N: Quote, Profile, Research), to place a toolbar on new PCs that leads to its Live Search engine, the companies said on Monday.
The deal is Microsoft’s latest attempt to chip away at the dominance of search leader Google Inc (GOOG.O: Quote, Profile, Research).The agreement, which takes effect next January for new PCs in theUnited States and Canada, displaces a similar one HP has with Yahoo Inc(YHOO.O: Quote, Profile, Research).
Under the agreement, Microsoft’s search engine will also be thedefault service on the Internet Explorer browser preloaded on new HPcomputers.
Microsoft did not disclose the terms of the agreement.
"This is the most significant distribution deal for Live Search thatMicrosoft has ever done," said Kevin Johnson, president of Microsoft’splatform and services division.
Number-two PC maker Dell Inc (DELL.O: Quote, Profile, Research) and Google have an agreement to preinstall Web and desktop search software on Dell’s consumer computers. It expires in 2009.
A Dell spokesman said the company has not decided if it willcontinue with Google after the current deal expires, but said it was"open to alternative" partnerships.
Google continues to extend its lead in Web search. Research firmcomScore said Google’s U.S. Web search market share rose to a record61.5 percent in April, while Yahoo’s share declined to 20.4 percent andMicrosoft’s slipped to 9.1 percent.
Redmond, Washington-based Microsoft has stepped up its efforts tocatch Google with a number of initiatives. Last month, it announced anew "cashback" rewards program to encourage people to use its searchengine to shop for items.
In February, it made an offer to buy Yahoo that was rejected by theWeb company’s board. Microsoft shelved its offer over disagreement onprice, but restarted talks with Yahoo last month to buy its searchservice, said a source familiar with the matter.
Shares of Microsoft were down 63 cents, or 2.2 percent, to $27.69, while HP was down 2 percent at $46.12.
(Reporting by Daisuke Wakabayashi; Editing by Braden Reddall)
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