HP computers will use Microsoft Internet search engine as default

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June 03, 2008|By Bloomberg News

Microsoft Corp.'s Internet search engine will become the default search program on all personal computers sold in the U.S. and Canada by Hewlett-Packard Co., the world's biggest maker of the machines.

The Windows Live Search tool bar will be installed on PCs starting in January, Microsoft said yesterday. The software also will direct users to Hewlett-Packard's sites, including its photo service Snapfish.

Microsoft's search engine, the third most popular, will replace Yahoo Inc.'s as the default on Hewlett-Packard machines. The agreement is designed to help Microsoft get its sponsored links in front of more users and take market share from Yahoo and Google Inc., the top two U.S. search engines. Microsoft scrapped a $47.5 billion bid for Yahoo on May 3.

"The fact is, very few people actually change their defaults," said Sue Feldman, an analyst at IDC, a market researcher in Framingham, Mass. "This is all about eyeballs right now."

Winning more search users could help Microsoft, the world's largest software maker, fuel growth in Web advertising sales, which reached more than $40 billion industrywide last year. Google got more than six times as many search requests as Microsoft in April, helping the company reap higher ad sales. Yahoo performed twice as many searches.

Microsoft and Hewlett-Packard have a "financial arrangement," said Angus Norton, senior director of Microsoft's Live Search Platform. He declined to elaborate. Microsoft has a similar deal with Lenovo Group Ltd. for laptops, and the software maker is pursuing partnerships with other computer companies, Norton said.

"When we talk to our advertisers, they tell us that they get great click-through, great advertisement performance, but they don't get the volume that they need," Norton said, referring to the number of people using Microsoft's search engine.

He said the deal with Hewlett-Packard will drive a "very high" volume of search queries.

In the first quarter, Hewlett-Packard sold 3.88 million PCs in the U.S., according to IDC. The tool bar will be built using Microsoft's Silverlight technology and modeled after the MSN toolbar, which has buttons that let users preview Web sites without leaving the page they are on.

Yahoo's search engine has been the default on consumer PCs in the U.S. and Canada since 2006, said Ulf Claesson, a Hewlett- Packard vice president. Yahoo and Hewlett-Packard also had an undisclosed financial arrangement, he said. Time Warner Inc.'s AOL is the default search engine for PCs in other markets, he said.

"On the search side, Microsoft has continuously improved quality, speed and total user experience," Claesson said in an e-mail.

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