Dell and Google get closer

Dell and Google have agreed to the first in a series of deals to pre-install web and desktop search software on the PC maker's computers, Google CEO Eric Schmidt said on Thursday.

Speaking at a Goldman Sachs conference in Las Vegas, Schmidt discussed details of a long-rumoured deal between the number one search engine and the number one PC maker, which is a strike against Google rival Microsoft. Under the deal, millions of Dell PCs will be loaded with the Google toolbar for web and PC search, along with a co-branded homepage, before they're shipped to consumers.

Financial details were not disclosed but Schmidt said the companies will share revenue from search-advertising fees.

He said: "The real reason we do this is for users. [People] turn the Dell machine on, and everything is integrated right there. [This deal] is a turnkey solution for search."

A Dell representative said the deal will not hamper consumer choice on the Dell desktop, however: "Our motivation is to deliver customers tools that enable them to search and organise information quickly and easily, right out of the box... Dell customers will have the option of choosing Microsoft as their default if they prefer."

The deal covers Dell PCs sold to consumers and certain corporations.

As well as the Dell agreement, Schmidt talked about other coming Google services in a question-and-answer session at the conference.

For example, Google plans to introduce a targeted voice advertising service for internet radio in the coming months, he said. The company is working to convert technologies for creating radio ads to complement its own advertising platform.

He said: "Targeted advertising is known to work... There's every reason to think it will for radio."

Google is eyeing other complementary services for advertising. One such service would allow marketers to buy "run of site" promotional packages for itself or for partners' sites, Schmidt said.

The web giant is testing pay-per-call plans, which let marketers advertise in keyword search results and pay only when people call a 1-800-number for the promoted service. Schmidt said: "Eventually, we'll roll it out."

The Google-Dell deal comes on the same day eBay and Yahoo! announced a three-year marketing deal that effectively combines their resources against rivals Google and Microsoft. Under terms of that agreement, Yahoo! will provide graphical and search-related ads to eBay sites. In turn, eBay's PayPal will be the default online payment service on Yahoo!.

In answer to a question about competition, Schmidt said eBay isn't a rival but rather a partner that he sees will grow closer to Google in the coming years. eBay will likely grow stronger because of its partnership with Yahoo!, he said.

In contrast, Schmidt said he views Microsoft and Yahoo! as clear competitors.

To be sure, Yahoo! and Microsoft were reportedly vying for search-bar real estate on Dell PCs before Google sealed the deal. Schmidt said Dell has been testing its software for the past six months.

Still, at least one analyst was largely unimpressed with the Google-Dell agreement.

Stephen Baker, an analyst at NPD Techworld, said: "It strikes me as a great deal for Dell, as they are basically selling dead space, and a bad deal for Google, as I doubt that they will collect many incremental eyeballs beyond the ones they have now."

Stefanie Olsen writes for CNET News.com