Reports that Google is set to pay Dell $1billion in order to have its software pre-installed on the manufacturer's PCs, highlight an interesting new front in the battle between the young Internet upstarts and technology industry grandad Microsoft.
Although both sides are being coy about the deal, first reported in the Wall Street Journal, it is believed to cover the Google toolbar, desktop search and a special Google homepage for Dell users. Google is believed to have outbid rivals Yahoo! and Microsoft for the rights.
This would not be the first deal of its kind for search engine giant. The WSJ reports that Google has already signed a deal with HP where it pays $1 for every PC with a toolbar installed with another 75 cents going to the PC maker for the first query.
These deals are vital for Google as it gives the company a headstart over rivals in connecting users to its range of online services and the associated advertising which is fuelling Google’s rapid growth.
All this, of course, means a very big headache for Bill Gates and Co over at their Redmond headquarters. They must be sick to death of hearing the word Google. No wonder Steve Ballmer is reported to have gone into a chair throwing rage over previous Google antics.
The worry for Microsoft must be that this deal is just the first step. Google has already put together the Google Pack, a bundle of software for easy downloading to the desktop.
It is also no secret that Google has been working on a desktop Linux distribution and rumours of its own productivity suite based on OpenOffice have been circulating for some time. What if these were also to be pre-installed on PCs?
In a single blow, revenues for Microsoft’s cash cow, its Office desktop application suite, would be devastated. Previously, Microsoft could have levered its monopoly position to get PC manufacturers to toe the line, but these days are long gone, buried under an avalanche of anti-trust lawsuits.
Having been dictated to for so long, PC manufacturing executives must find it particularly satisfying to be able to turn the tables and play software and internet companies off against one and earn an extra bit of cash in the process.
In an industry that is especially cut throat and margins notoriously tight, the opportunity to earn a few more dollars must be especially welcome.