Reuters reports that Google and Dell have reached a three-year agreement in which Dell PCs will preinstall Google software (Google Toolbar, Google Desktop) and will set Internet Explorer homepage to http://google.com/ig/dell for $1 billion.
"A large-scale agreement with the world's largest PC maker would be a major inroad for Google. A decade ago, Microsoft used its leverage over PC makers to gain control over which software came installed in new computers, betting that customers rarely bother to replace many of those programs."
Google didn't want to use the power of default applications, but probably saw this as an opportunity to increase its number of users. Most people use toolbars to access search engines and Internet Explorer 6 has a big hole in this area. Besides, more than 50% of Yahoo Search users search from Yahoo Toolbar.