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H-P COMPUTER BROWSERS TO FEATURE YAHOO SEARCH TOOLBAR

Deal Competes With Similar Dell-Google Arrangement

NEW YORK (AdAge.com) -- Establishing consumer relationships right out of the box, Hewlett-Packard has agreed to feature Yahoo's search toolbar on the browser of its personal computers. The deal, which gives Yahoo a head start on the competition, mirrors a similar relationship forged between Google and Dell earlier this year.

Bedding down with HP, the second largest computer-maker (Dell is the largest), "puts Yahoo in an excellent position to be able to distribute our most widely adopted offerings," said Yahoo's chief operating officer, Dan Rosensweig. "This relationship is an important component of Yahoo's overall strategy to partner with leading global brands that will enable us to further extend our products and services."

Less wiggle room for small players
According to Merrill Lynch, major distribution deals with Dell and HP have secured the default search position on Internet Explorer 7 for Google and Yahoo, respectively, for about 50% of the U.S. consumer browser market. Obviously, that means less wiggle room for smaller search providers to maneuver.

HP's consumer computers will come with the Internet-browser toolbar that features links to Yahoo services -- including e-mail, news and financial links -- while Yahoo will be the default search service on Microsoft's forthcoming Internet Explorer 7 browser.

Financial terms of the deal were not released, but analysts were ready to fill in the blanks. "We believe Yahoo will pay a bounty (that we estimate at between $1-$3 per PC shipped) and a revenue share for advertising generated from an HP PC," Merrill Lynch analyst Justin Post wrote in a research note released Sept. 29. As Mr. Post noted, it is not clear whether the relationship affects Yahoo's search-monetization remodeling.

By Gavin O'Malley Mailed 2006-12-05

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