diff --git a/shell/view/clipboardicon.py b/shell/view/clipboardicon.py
index ef0de29e..143d016e 100644
--- a/shell/view/clipboardicon.py
+++ b/shell/view/clipboardicon.py
@@ -17,6 +17,7 @@
 
 import logging
 import os
+import urlparse
 
 import gobject
 
@@ -74,8 +75,13 @@ class ClipboardIcon(CanvasIcon):
             self.props.background_color = color.TOOLBAR_BACKGROUND.get_int()
 
     def get_popup(self):
+        cb_service = clipboardservice.get_instance()
+        obj = cb_service.get_object(self._object_id)
+        formats = obj['FORMATS']
+
         self._menu = ClipboardMenu(self._name, self._percent, self._preview,
-                                   self._activity)
+                                   self._activity,
+                                   formats[0] == 'application/vnd.olpc-x-sugar')
         self._menu.connect('action', self._popup_action_cb)
         return self._menu
 
@@ -83,15 +89,19 @@ class ClipboardIcon(CanvasIcon):
         return self._popup_context
 
     def set_state(self, name, percent, icon_name, preview, activity):
+        cb_service = clipboardservice.get_instance()
+        obj = cb_service.get_object(self._object_id)
+        installable = (obj['FORMATS'][0] == 'application/vnd.olpc-x-sugar')
+
         self._name = name
         self._percent = percent
         self._preview = preview
         self._activity = activity
         self.set_property("icon_name", icon_name)
         if self._menu:
-            self._menu.set_state(name, percent, preview, activity)
+            self._menu.set_state(name, percent, preview, activity, installable)
 
-        if activity and percent < 100:
+        if (activity or installable) and percent < 100:
             self.props.xo_color = XoColor("#000000,#424242")
         else:
             self.props.xo_color = XoColor("#000000,#FFFFFF")
@@ -107,27 +117,39 @@ class ClipboardIcon(CanvasIcon):
                 self._open_file()
 
     def _open_file(self):
-        if self._percent < 100 or not self._activity:
+        if self._percent < 100:
             return
 
         # Get the file path
         cb_service = clipboardservice.get_instance()
         obj = cb_service.get_object(self._object_id)
         formats = obj['FORMATS']
-        if len(formats) > 0:
-            path = cb_service.get_object_data(self._object_id, formats[0])
+        if len(formats) == 0:
+            return
 
-            # FIXME: would be better to check for format.onDisk
-            try:
-                path_exists = os.path.exists(path)
-            except TypeError:
-                path_exists = False
+        if not self._activity and \
+                not formats[0] == 'application/vnd.olpc-x-sugar':
+            return
 
-            if path_exists:
-                uri = 'file://' + path
+        uri = cb_service.get_object_data(self._object_id, formats[0])
+        if not uri.startswith('file://'):
+            return
+
+        path = urlparse.urlparse(uri).path
+
+        # FIXME: would be better to check for format.onDisk
+        try:
+            path_exists = os.path.exists(path)
+        except TypeError:
+            path_exists = False
+
+        if path_exists:
+            if self._activity:
                 activityfactory.create_with_uri(self._activity, uri)
             else:
-                logging.debug("Clipboard item file path %s didn't exist" % path)
+                self._install_xo(path)
+        else:
+            logging.debug("Clipboard item file path %s didn't exist" % path)
                         
     def _popup_action_cb(self, popup, menu_item):
         action = menu_item.props.action_id
@@ -153,3 +175,9 @@ class ClipboardIcon(CanvasIcon):
                 self.props.background_color = color.DESKTOP_BACKGROUND.get_int()
             else:
                 self.props.background_color = color.TOOLBAR_BACKGROUND.get_int()
+
+    def _install_xo(self, path):
+        logging.debug('mec')
+        if os.spawnlp(os.P_WAIT, 'sugar-install-bundle', 'sugar-install-bundle',
+                      path):
+            raise RuntimeError, 'An error occurred while extracting the .xo contents.'
diff --git a/shell/view/clipboardmenu.py b/shell/view/clipboardmenu.py
index 3e8239d6..9db69223 100644
--- a/shell/view/clipboardmenu.py
+++ b/shell/view/clipboardmenu.py
@@ -33,7 +33,7 @@ class ClipboardMenu(Menu):
     ACTION_OPEN = 1
     ACTION_STOP_DOWNLOAD = 2
     
-    def __init__(self, name, percent, preview, activity):
+    def __init__(self, name, percent, preview, activity, installable):
         Menu.__init__(self, name)
         self.props.border = 0
 
@@ -54,10 +54,10 @@ class ClipboardMenu(Menu):
             self._preview_text.props.font_desc = font.DEFAULT.get_pango_desc()        
             self.append(self._preview_text)
         
-        self._update_icons(percent, activity)
+        self._update_icons(percent, activity, installable)
         
-    def _update_icons(self, percent, activity):
-        if percent == 100 and activity:
+    def _update_icons(self, percent, activity, installable):
+        if percent == 100 and (activity or installable):
             if not self._remove_item:
                 self._remove_item = MenuItem(ClipboardMenu.ACTION_DELETE,
                                              _('Remove'),
@@ -73,7 +73,7 @@ class ClipboardMenu(Menu):
             if self._stop_item:
                 self.remove_item(self._stop_item)
                 self._stop_item = None
-        elif percent == 100 and not activity:
+        elif percent == 100 and (not activity and not installable):
             if not self._remove_item:
                 self._remove_item = MenuItem(ClipboardMenu.ACTION_DELETE,
                                              _('Remove'),
@@ -102,8 +102,8 @@ class ClipboardMenu(Menu):
                 self.remove_item(self._open_item)
                 self._open_item = None
 
-    def set_state(self, name, percent, preview, activity):
+    def set_state(self, name, percent, preview, activity, installable):
         self.set_title(name)
         if self._progress_bar:
             self._progress_bar.set_property('percent', percent)
-            self._update_icons(percent, activity)
+            self._update_icons(percent, activity, installable)