Dell and Google Team Up

Updated: Dell's proposed deal to preinstall Google's search engine on its computers should add a lift to Dell's softening sales. It's also a blow to Microsoft.

Dell and Google have struck a deal, Googles CEO confirmed on May 25.

Speaking at an investor conference in Las Vegas, Google CEO Eric Schmidt acknowledged that Dell and Google have reached an agreement.

Schmidt provided few details of the agreement that earlier speculation had placed in the $1 billion range.

So far a co-branded Web site is the most visible aspect of the collaboration, but the cracks that occurred in the Microsoft/Dell/Intel troika when Dell allowed AMD to come to its party, have now reached the earthquake stage.

In early February, rumors were rife of an impending $1 billion dollar deal between Dell and Google.

Under that proposed deal, Dell would preinstall the Google search engine on 100 million computers over the next three years. While neither company was confirming the story, the expectation was Google would be paying Dell about $1 for each machine going out the door with the preinstall and Google search bar and another 75 cents when the search was activated.

Although that agreement is still far short of $1 billion, additional agreements and add-ons would make up the remainder or the per computer pricing might actually range between $5 and $10, according to the speculation.

On May 25, the rumor mill rumblings were confirmed when Google CEO Eric Schmidt spoke at the Las Vegas Internet conference.

Dell has seen softening sales and the Google deal would represent a welcome source of added revenue. Google would get primary attention to Dell users upon the first bootup of new machines.

/zimages/1/28571.gifClick here to read about the ongoing Microsoft-Google browser war.

The deal represents another blow to Microsoft, which wants to have their search engine be part of the startup screen at Dell.

At one time, Dell seemed solely tied to Intel and Microsoft. The decision to allow AMD chips in the high-end server line and now the apparent decision to allow Google into the startup screen is a telling signal how far Dell is willing to go to get growth back on track.

Earlier during the week of May 22, Dell also announced they were opening two stores, although customers in those retail stores would still have to order their systems online.

Editors Note: This story was updated to include information that confirms the deal between Dell and Google.

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