The Microsoft Corporation reached an agreement on Tuesday with the Lenovo Group to pre-load Lenovo computers with a toolbar of Microsoft’s Windows Live online services including Web search, the two companies said.
The agreement between Lenovo, the world’s third-largest PC maker, and Microsoft replaces a similar deal the Chinese computer maker had with Google, the leader in online searches, to pre-load its toolbar on its desktop and notebook computers.
The agreement will set live.com, Microsoft’s customizable news, information and search engine site, as the default home page for Lenovo PC users and add a Windows toolbar inside the PC’s Internet Explorer browser.
These sorts of “pay for play” deals are now increasingly common (Google’s Dell deal being the most expensive and highest profile one). This Lenovo deal will test Google’s brand strength for future Lenovo users. Microsoft’s IE7 browser, however, with its default to Live Search, has not apparently positively impacted search market share numbers for the company.
Bloomberg (the first link above) paraphrases an earlier statement from Microsoft CEO Steve Ballmer:
Microsoft Chief Executive Steve Ballmer said last month that the company would boost operating expenses by almost $2.7 billion in the coming fiscal year, partially to fund agreements that bring customers to Microsoft’s Internet services. Ballmer said if he saw additional opportunities to get online customers, he might increase that budget again.
While Chris Sherman calls this potentially a “coup,” I might disagree. While it might provide exposure to users otherwise unaware of Live Search, in my view buying users won’t work as a long-term strategy. Microsoft needs to combine awareness and marketing with innovation to create a differentiated product. Right now, arguably, Live Search is not different or compelling enough for users to make the switch from Google or Yahoo!
There are some differences and arguably better features on Live — Live image search is better I think than Google’s image search. And Local also has the opportunity to differentiate, but has yet to do so in a big way (beyond Birds Eye and 3-D). Along those lines, Live Search has recently added “classifieds” (Expo) to the search toolbar.