Matt Brocklehurst, Head of Marketing at search specialist Latitude, examines the implications for the mobile search market of Microsofts bid for Yahoo!

Unless something really big happens, it is safe to say that
Microsoft has the Tech Story of the Month title all sewn up with the
attempted takeover of Yahoo! that it announced on Friday. A bid worth
approximately 22.4 billion, the proposed deal sees Microsoft willing
to stump up a fair amount of brass in order to take on Google in a race
where the stakes grow higher every day.
While it is certainly not
the main attraction of the takeover attempt, Microsoft CEO Steve
Ballmer mentioned mobile services explicitly in the proposal letter he
wrote to the Yahoo! board. As Ballmer knows, any deal joining Yahoo!
and Microsofts mobile endeavours could launch a serious challenge to
Google.
Estimates project that, over the next five to 15 years,
mobile search could be worth up to 10 billion. Right now, it is a
significantly less developed area than the overall online search
market. As such, there is much more ground to be gained by Microsoft
and Yahoo! there, and both companies have been relentless in their
mobile efforts over the last several months.
In January 2007, Yahoo!
launched oneSearch, its mobile search service. OneSearch comes in the
form of a downloadable application which the user installs on his or
her phone, and gives results from the areas of news, images, sport,
events, finance, and business listings for each queried search phrase.
Late last year, Yahoo! also added Wikipedia and its popular Yahoo!
Answers to oneSearchs functionality. Just last month, the beta version
of Yahoo! Go 3, Yahoos dedicated mobile platform, was released for use
only on higher end phones such as Apples iPhone, Nokia Series 60
handsets, and select Windows Mobile devices.
We can expect that
range of Windows Mobile phones running Yahoo! Go 3 to expand quickly if
the Microsoft takeover goes through. Indeed, Microsofts stronger ties
with mobile operators – especially in the US – is one area where they
could be of particular help to Yahoo. For in the US, carriers actively
remove Yahoo! Go from the 250 or so handsets on which it comes
pre-loaded. So American mobile users must just as actively find out
about Yahoo! Go and then manually download it. This has been a thorn in
Yahoos side in terms of uptake, to put it mildly, but Microsoft could
remove this if the deal goes through: It projects 20 million in Windows
Mobile licence sales for 2008, and has its mobile operating system
distributed in 55 countries by 160 mobile carriers.
Almost a year
ago, Microsoft acquired Tellme Networks – its largest ever private
purchase and the fourth largest deal in Microsofts corporate history.
Tellme provides voice-enabled mobile search, automated directory
assistance and enterprise customer service. Indeed, the enterprise side
is where Microsofts mobile strength seems to lie, with Yahoo! being
much more developed on the consumer side. If Microsoft integrated
Yahoo! Go into Windows Mobile, this could give both companies – and
especially Microsoft – the boost they need to reach millions more
users.
On the other hand, Microsoft has been roundly criticised
for failing to maximise the leverage it should have got out of Motion
Bridge, an acclaimed mobile search provider it acquired almost two
years ago. That move has been described as a desperation-driven
purchase that amounted to Microsoft killing Motion Bridge – echoing
accusations and predictions which have been levelled against the Yahoo!
acquisition attempt in recent days.
Meanwhile,
Googles forays into
mobile have been a mixture of rumour, speculation, and actual services.
The long-fabled Google phone may or may not (smart money is on not)
come to fruition, but its mobile operating service Android will give
Microsoft and Yahoo! a run for their money. The search giant has
already made swift and steady progress in engaging users on mobile,
through local search (via mobile web and SMS), maps, and even AdWords.
In
the US, Google also plans to bid on upcoming wireless spectrum
auctions, and has taken a robust and active interest in how American
regulators will carry out those auctions, eager to ensure that its
content will make its way quickly and without trouble to users phones.
That content includes YouTube videos. Just last month, Google upgraded
its YouTube Mobile service to allow users to download any YouTube
video, and added all of the features they know from the website.
Just
the other week at the World Economic Forum in Davos, Google CEO Eric
Schmidt was not shy in his proclamations about the potential for a
huge revolution with fully mobile services online, likening it in
impact to a re-creation of the Internet.
Its a revolution whose
leader has yet to be anointed, and the crown is definitely up for
grabs. Thats exactly what Microsoft – a company that gave Google a
jump start on the web by underestimating the Internets potential
during its earliest years – is betting on.