The Google/Dell Alliance Has Interesting Ramifications For Apple & Microsoft

Google recently did something very interesting. They paid Dell to bundle the Google Desktop Search application on every new Dell that rolls out the door. This deal will take effect in the near future but it has immediate impacts on two main companies, Microsoft and Apple.

The impact on Microsoft is fairly obvious. Dell, the world’s leading PC maker, has now added a non-Microsoft component to their bundled software package. Now, this wouldn’t worry Microsoft so much if the company behind this move was anyone other than Google. But alas, Microsoft’s new arch-nemesis has proven yet again to be one step ahead of Bill & friends.

Now, this move by Google is important for several reasons. The first is by getting Dell to bundle their software they ensure that 33% of the market gets instant access to a Google product. And most users never switch from their computer’s pre-installed software. This means that Microsoft (and its MSN portal) are cut out of the picture. This move will also serve to further the distance between Google and Yahoo/MSN/everyone else. Score one for Google!

The second reason this is important is that it clearly shows a weakening in Microsoft’s power. Anyone remember Netscape? Had they tried something like this Bill would have called Mr. Dell himself and kindly explained that if he wanted to remain in business then he better remove that offending product from his computers ASAP. But the times have changed (thankfully) and those types of practices can no longer be committed quite so blatantly. This is due in part to mildly stricter government oversight but is mainly a result of Google’s power and bankroll. If Microsoft were to try something like that Google would have no problem fighting them in the media and in the courts till something was resolved in Google’s favor. Score two for Google.

But most important of all is the precedent this sets. If Google can do this with Dell then they can do it with anybody. Soon we may see every new PC pre-bundled with Google applications, not just their search utility. Imagine how frustrating this will be to Microsoft if Google bundles FREE products that compete with Microsoft’s offerings. Even if Google’s products are inferior the very fact that they are there will ensure that at least some customers use them. Google will do to Microsoft what Microsoft has done to so many other companies before! The irony is rather amusing to say the least.

Here is an example of something that Google could do that would terrify Microsoft. They bundle the following with every new PC: Google Search Tool (cuts out MSN portal), Picasa (cuts out Microsoft’s iPhoto competitor that is to ship with Vista), Google Earth (cuts out MS earth mapping tool), Gmail Enhanced (cuts out Outlook) and those are just applications that Google could ship now. Imagine what would happen in Redmond if Google offered to bundle a free word processor with every Dell? Take away some of the revenue that the MS Office suite generates and suddenly Google has seriously hurt Microsoft. Score three for Google.

But what about Apple? How does this effect them? Well, this doesn’t effect them directly but should serve as an example of what they should consider doing. What is the default media player for Windows? Why, I believe it is . . . Windows Media Player. Want to listen to a song? WMP. Want to watch a movie? WMP. Ok, for those of you who don’t know, WMP is a horrible application. A much better solution (to part of the problem at least) is iTunes.

I think Apple should convince Dell to pre-install iTunes and make it the default music player on all of their new machines. You figure so many people own iPods now they would welcome it if Apple and Dell saved them one more step, right? If Apple were to do this it would increase revenue from the ITMS, increase exposure to Apple’s products and be another big shot at Microsoft. A partnership like this would further tighten Apple’s grip on the media scene.

So Mr. Jobs, please take note and consider giving Mr. Dell a call. I am sure he has cooled off by now about that whole “which company has the bigger market cap” thing.