Let’s see… Microsoft will be paying twice what Google is offering AND will be giving away Windows Mobile (a paid product) for free. Look forward to hearing the long-term economic rationale for this one:
WSJ: Microsoft Corp. is moving closer to an agreement with Verizon Wireless to become the default search provider on the wireless carrier’s mobile phones, a deal rival Google Inc. has been striving for, people familiar with the discussions said.
Under the terms now being considered, Microsoft would share revenue with Verizon from ads shown in response to mobile phone Web searches, with guaranteed payments to the carrier of approximately $550 million to $650 million over five years, or roughly twice what Google offered, these people said.
[Bear in mind that Microsoft generates far less money per search than Google. So it will really take a bath on this.]
Separately, Microsoft is negotiating a deal to put its Windows Mobile software in more Verizon devices. The combined value of the two deals could top $1 billion, these people said, though it isn’t clear if Microsoft is offering to pay Verizon to use Windows Mobile, or would allow Verizon to use the software for free.
Verizon is tilting toward Microsoft because the software giant is offering significantly better financial incentives, but the telecom company is still in discussions with Google and the situation is fluid with both companies, these people said.
Google is now probably getting quietly desperate, too (stock price $300), so it will be interesting to see if it panics and does something economically stupid. Probably not, but possible, given how much Google is betting on the growth of mobile.
If Microsoft is serious about search, meanwhile, it has to do a deal with Yahoo–full stop. That is its only chance. Short of that, all these little deals are wasted money. And, in this case, as Dan Frommer has observed, it’s not even clear that Verizon users will even use the default search window, let alone allow Microsoft to make any money from it.
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