Microsoft Buys Search Engine Distribution & Possible Market Share

Microsoft continues to prove that it means business to Yahoo! and Google. Yesterday Microsoft announced a new distribution deal with Hewlett-Packard, the second-largest producer of PCs in North America. Microsoft will be building a Live Search-equipped toolbar that will be included on all new HP computers in the United States and Canada, beginning January of 2009.

The custom Live Search toolbar will be based on Microsoft’s cross-browser plug-in, Silverlight.

Distribution deals such as this are not uncommon. All of the major computer manufacturers are partners with one search engine or another. Dell is teamed up with Google and Acer is partners with Yahoo!. What is significant about this new Microsoft deal is the computer market share that HP has a firm hold on.

According to IDC, in the first quarter of 2008 Dell led the domestic market with 30.9% and HP trailed with 24.3%. Not surprising there. The interesting part of these statistics belongs to Acer, who deals with Yahoo! (Microsoft’s lost date at the search engine prom). Acer has only 8.7% of the market share, more than 15% behind HP!

If that wasn’t enough, Microsoft also has its foot in the door for international exposure with this deal. HP is the largest computer manufacturer internationally, beating out Dell by nearly 4%. The international distribution deal hasn’t happened yet or may never happen, but surely Microsoft will make a bid if it ever goes up for grabs.

This is an awesome example of Microsoft’s ability to get things their way, one way or another. Before this deal, Microsoft’s only distribution deal for Live Search was with Lenovo, which is barely on the domestic computer manufacturing radar. With this deal, I expect there will be a market share jump for Microsoft early next year.