Under the partnership, Yahoo would become the "on deck" search provider on most T-Mobile devices and deliver advertising on the carrier's new "web2go" portal. Mobile decks are the mini-portals created by wireless carriers through which consumers often enter the mobile web.
Valuable real estate
Neither company would disclose their revenue-sharing scheme, but analysts estimate carriers pocket some 60% to 70% of the revenue. According to a recent Wall Street Journal article, Microsoft was willing to pay Verizon Wireless approximately $550 million to $650 million over five years for real estate on the carrier's deck. (Subscribers are not locked into a carrier's on-deck search engine, but for many of them, the carrier's deck, akin to a home page, is their launching pad.)
Search providers Yahoo, Google and Microsoft are willing to cede a majority of the revenue to wireless operators as they jockey for position in the mobile space, which boosters believe will become an advertising gold mine that will eventually surpass online ad dollars. At the moment, Google is ahead in mobile search, with a share twice as large as Yahoo's, according to measurement firm M:Metrics.
For their part, carriers have been wary of search companies, which they view as competitors trying to cash in on their network traffic. But as smartphones become mainstream, search queries are expected to jump in lockstep and consumers will demand optimal search experiences.
With the T-Mobile partnership under its belt and AT&T already in its pocket through a similar deal signed earlier this year, Yahoo is now one up on Google, which has a deal with No. 3 U.S. carrier Sprint.
Verizon could be next
Verizon Wireless is still without a search partner, though negotiations with Google and Microsoft are said to be ongoing.
The T-Mobile deal was no small win for Yahoo, which is determined to prevent a repeat of its setback several years ago, when Google chipped away its online dominance. "It's really our way of making sure that we don't have happen in the mobile space what happened in the PC space, where Google really won the distribution game," Marco Boerries, exec VP at Yahoo, said yesterday.
Yahoo's deal with T-Mobile comes after making inroads in some European markets earlier this year, when it elbowed out Google as the carrier's default search engine.