Verizon, Microsoft unite in mobile search

Microsoft Corp. forged deals to make its search engine the default software on most Dell Inc. consumer computers and Verizon Wireless mobile phones, stepping up its effort to crack Google Inc.'s dominance.

A three-year contract with Dell will put Microsoft's search program onto Dell personal computers by next month, the company said last night. The deal followed an agreement with Verizon earlier in the day.

The two partnerships will get Microsoft in front of more customers, increasing the odds that users choose it over Google's search engine. Microsoft, which also has deals with Hewlett-Packard Co. and Sun Microsystems Inc., has a seventh of Google's market share in Internet queries. The company needs a way to attract more users after a failed attempt last year to buy Yahoo! Inc., No. 2 in the market.

"If you're Microsoft looking around and you can't do the Yahoo deal yet, you're looking at where else you can get a lot of eyeballs," said David Card, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. "A leading PC company and the leading mobile company are a good place to start."

Microsoft Chief Executive Officer Steve Ballmer discussed both agreements in a speech last night at the Consumer Electronics Show in Las Vegas. He also announced the first public test version of Microsoft's new Windows operating system.

Microsoft, the world's biggest software maker, rose 37 cents to $19.88 in Nasdaq Stock Market trading at 1:35 p.m. New York time. Shares of the Redmond, Washington-based company tumbled 45 percent last year.

Still Investing

It was Ballmer's first keynote address at the show. He replaced Microsoft founder Bill Gates, who gave 11 of the speeches before stepping down from his day-to-day management role at Microsoft last year.

Ballmer said Microsoft will continue to invest more in new technology than rivals, even with the recession.

"Companies that continue to pursue innovation during tough economic times will position themselves better than companies that pull back," he said.

Dell, the second-largest PC maker after Hewlett-Packard, signed an agreement in 2006 to preinstall Google's tool bar on its machines. The company will continue to work with Google, said Dell spokesman Bob Kaufman.

"We're passionate believers in competition that's good for users," Mountain View, California-based Google said in a statement. "We're committed to working with industry leaders to provide the best user experience possible."

Verizon Deal

As part of the five-year Verizon agreement, the mobile- phone company will use Microsoft's search engine and related advertising. Verizon will become the largest U.S. wireless- service provider this week, when it completes its acquisition of Alltel Corp.

Microsoft released a test version of Windows 7 yesterday to software developers who subscribe to its technical Web sites. The software will be broadly available for downloading on Jan. 9.

The new version is designed to correct some of the difficulties customers had with the current Windows Vista. That software didn't work well with many applications and computers when it debuted in 2007.

The company demonstrated Windows 7 during Ballmer's speech, showing features that make it easier to stream photos and music to different machines on a home network. The software also lets customers connect devices to their computers more quickly.

Ease of Use

It's critical that Microsoft produce a compelling and easy- to-use version of Windows after Vista turned off corporate customers, said Heather Bellini, an analyst at UBS AG in New York. Many of those users decided to skip Vista entirely and wait for Windows 7, she said.

At a conference in October, the company gave an early look at Windows 7. So far, the reviews have been positive, said Rob Helm, an analyst at Kirkland, Washington-based Directions on Microsoft.

"Everything we've seen so far suggests they are delivering an incremental release that does no harm and some good, compared to Vista, which is what we've been hoping for," he said. "What businesses are looking for is something that doesn't increase hardware requirements and doesn't introduce new incompatibilities."

Ballmer also announced that Microsoft's Windows Live Internet programs will be connected to Facebook Inc.'s social- networking site. That means customers can share Facebook updates with their Windows Live contact list.