Computer giant Dell and internet search engine Google have reached a deal to install Google software on Dell's PCs before they leave the factory.
Google says this is the first of several deals
The Dell computers will contain Google software including several personal computer applications, a Google toolbar and a co-branded homepage.
Both firms will receive revenue from the deal, but details remain unknown.
Google chief executive Eric Schmidt said that it was the first of several such deals.
Speaking to a group of investors during a Goldman Sachs internet conference, Mr Schmidt said: "There is probably more to come."
Dell made no comment.
The agreement between the world's largest personal computer company and Google, comes after the two firms announced in February that they were in talks about installing Google's software on Dell computers.
The talks came about after Yahoo pulled out of negotiations.
The deal could mark a major turning point for Google and mark a serious threat to rival Microsoft.
Microsoft and Google have adopted different business models.
Instead of selling software to make a profit, Google makes money by selling advertising to firms that want access to those who use its free products.
Microsoft has identified this sort of software as a key threat to its business, which relies on the healthy margins it earns from Windows and its Office productivity suite.
It is now evolving its own business more towards pay-per-use, seeking to integrate its offerings more with online applications.
Google shares rose by $1.74 closing at $382.99 on the Nasdaq, before slipping 99 cents in extended trading.
Meanwhile Dell shares climbed 12 cents closing at $24.30 on Nasdaq, before rising 9 cents in extended trading.