Microsoft faces long slog against Google -- despite latest deals |
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Recent deals struck by Microsoft Corp. seem to strengthen the company’s position against Google in the internet search market, but the full effect may not be evident for months or even years.
Microsoft's challenge was highlighted again today by the latest U.S. search data from comScore Networks, which showed the company's overall share of the market remaining stagnant at around 8 percent.
Under the agreements, consumer PCs from Dell and Hewlett-Packard will soon start shipping with Microsoft’s Live Search engine as the default setting. People who make queries from built-in browser toolbars and search fields on those computers will go through Microsoft’s search site — unless they change the default or navigate to another engine.
Microsoft announced its Live Search deal with Dell at the Consumer Electronics Show Jan. 7, following up on a similar agreement with HP last year. The two companies are the largest PC makers, by far. Combined, HP and Dell represent more than half of U.S. personal computer shipments and a third of worldwide shipments, according to data from the IDC research firm.
Those are big numbers when compared with Microsoft’s relatively small slice of the search market. The numbers released by comScore today show the company holding steady at 8.3 percent of the market, compared with 63.5 percent for Google and 23.5 percent for Yahoo.
Microsoft last week also announced a new search deal with Verizon on cell phones. Previously it made search agreements with Sun Microsystems and Facebook.
Microsoft’s HP and Dell deals are “a pretty good coup,” said analyst Roger Kay, president of the Endpoint Technologies Associates consulting firm in Wayland, Mass. “If you look at it, they captured the top U.S. vendors, by a lot.”
However, it will take time for the effects to filter into the market.
That’s because the number of PCs sold each quarter pales in comparison to the number already in use. About 80 million PCs were shipped worldwide in the third quarter, according to IDC, but analysts estimate 1 billion PCs are in use globally.
The terms of Microsoft’s HP and Dell deals also leave out a large chunk of the market, corporate PC users, focusing instead on new computers for consumers.
The HP deal, which took effect this month, makes Live Search the default on all HP consumer PCs shipped in the United States and Canada. Microsoft’s Dell agreement calls for the PC maker to install Live Search on “a majority” of its new consumer and small-business personal computers starting next month.
All told, the Dell and HP deals could help Microsoft boost market share slightly in the United States after a year, perhaps by 2 or 3 percentage points, analyst Kay estimated.
The key issue is whether people will be content to use Live Search after it’s pre-installed. Such deals with PC makers are based on the theory that many PC users won’t change the default settings, or don’t know how. But it’s also easy for users to just type Google’s address into the browser if they don’t like what they get.
Many people will try the pre-installed Live Search at least once, especially if they’re accustomed to searching from the field built into the browser, said Matt Rosoff, industry analyst at the Kirkland-based Directions on Microsoft research firm. However, even under that default scenario, Microsoft will have limited time to persuade those people to make the switch permanently.
“The results have to be as good as Google,” Rosoff said.
Microsoft says the relevance of its search results now matches Google, citing studies to back its assertion. But in the end, it’s a subjective issue, and Google’s rising share of the market means that people are still using its engine far more than others.
In the end, the quickest way for Microsoft to boost its market share would be to partner with or acquire Yahoo’s search business. Microsoft is no longer seeking to acquire Yahoo, but the Sunnyvale, Calif., company’s selection of former Autodesk CEO Carol Bartz as its new chief executive this week could set the stage for a search deal.
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