Dell to offer Google software on PCs

The battle for market share among computer makers and internet companies took a new twist on Thursday after Dell, the world?s biggest PC maker said it would sell PCs with pre-installed search software from Google.

For Dell, the partnership represents the latest attempt to boost revenues as it struggles against slumping margins, slowing sales growth and a turnround at Hewlett-Packard, its biggest PC rival. Dell last week announced that it would begin shipping some high-end servers containing AMD microchips in a separate attempt to increase sales.

For internet search giant Google, the move to offer Dell customers factory-installed search technology represents a direct challenge to Microsoft, the world?s biggest software company, whose suite of software tools has long dominated the PC desktop.

Eric Schmidt, Google?s chief excecutive, indicated that Thursday?s announcement marked the beginning of a broader partnership between the two companies.

?We are partnering on the advertising and there?s more to come,? he said, adding that both would share revenue from the partnership.

Google's rivals are implementing their own strategies to deal with Google?s rapid rise to the top of the internet search market. Yahoo, the search portal, on Thursday announced a multi-year advertising partnership with Ebay, the online auction site. Meanwhile, Microsoft has been talking steps to boost its own search offerings in an attempt to make up lost ground in the lucrative paid search business.

Dell said it would install the Google software on all of its consumer and small and medium business PCs. It said it would also offer the Google package to a limited number of its big corporate clients. The company declined to specify how many computers would be installed with Google but said it would be ?certainly in the millions? per year.

If successful, Dell?s partnership with Google could set the stage for further deals between software companies and computer makers, as PC groups attempt to squeeze move revenues out of their core hardware business.

Software companies such as Google also stand to cash in by tapping into a captive audience of computer users - the same strategy that propelled Microsoft to the top of the world software market after it began bundling programmes such as Microsoft Office with its Windows operating system.

Shares in Google fell slighly in after-hours trading, while shares of Dell rose 0.5 per cent to $24.43.