• by Shankar Gupta , May 29, 2006

Google's distribution deal with Dell Computers is viewed as likely to help Google gain even more market share, but also moves the search giant away from the core strategy that made the company so successful.

"So now it's official--Google is playing the distribution game, just like Microsoft does," wrote John Battelle, an author and search industry expert, on his blog last week. "Sure, this makes sense from a business standpoint, but Google did not get to become Google by cutting exclusive distribution deals. It got there by having the best product--a product that folks literally climbed over walls to get to."

Late last week, Google CEO Eric Schmidt announced the completion of a distribution deal with Dell Computers, packaging Google Software with laptops and PCs purchased from the Dell store.

The Google-Dell deal had been in the works for months. In January, Dell pre-set the home page on new computers to Google; the following month, a Dell spokesman confirmed to OnlineMediaDaily that the computer manufacturer had been testing Google software packages, including Google Desktop Search and the Google Toolbar, on Dell PCs. Google also created a special Dell Home Page, that was powered by the Google Personalized Home Page back-end.

Industry watchers noted that the deal is similar to deals cut by software giant Microsoft--which, in the late 1990s, used exclusive distribution arrangements in part to force its competitor Netscape into single-digit market share, while making its own Internet Explorer the dominant browser in the space. This deal also can be seen as a preemptive strike against Microsoft, which many industry observers think will eventually integrate its own search engine into its Explorer browser. Such an action would potentially encourage consumers to use Microsoft's search engine by default, which would cut into Google's share of searches.