Google Ropes in Sony

Google (GOOG - Analyst Report) recently struck a deal with Sony Corp. (SNE - Snapshot Report), according to which the latter will ship the Chrome browser pre-installed on some of its PC models. The financial or other details of the transaction were not disclosed. A Google spokesperson said that the deal was in the nature of a first step and agreements with other leading PC-makers are expected to follow.
 
We think this is an interesting move and could be leveraged to boost sales of its Chrome operating system to be launched next year. Microsoft’s (MSFT - Analyst Report) domination of the web browser space is largely attributable to its strategy of bundling the Internet Explorer with its operating system. Since MSFT operating systems continue to be the most commonly used, this is an obvious advantage. While Microsoft, being the market leader, is hindered by anti-trust actions from smaller players, Google Chrome is not likely to face this hurdle.
 
However, we expect the company to face stiff competition not just from Microsoft, but also Mozilla’s Firefox, Apple’s (AAPL - Analyst Report) Safari and Opera, which is more commonly used as a mobile phone web browser.
 
Sony’s share of the PC market has been shrinking and the company has dropped out of the top five, based on shipments to the U.S. and worldwide (according to both IDC and Gartner). The top five in the U.S. are Hewlett Packard Co. (HPQ - Analyst Report), Dell (DELL - Analyst Report), Acer, Apple and Toshiba (TOSBF). The top five in the world are HP, DELL, Acer, Lenovo (LNVGY) and Toshiba.
 
Management is focused on exposing the Chrome browser to more users and must have its eyes on the top five. We expect similar agreements with some of these players in the not-too-distant future.

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