T-Mobile is launching a new mobile portal powered by Yahoo (YHOO). The companies will share ad revenue, but aren’t disclosing the length of the deal or whether Yahoo will offer the carrier guaranteed revenue.
Here’s a backhanded compliment: T-Mobile told the WSJ that Yahoo is specifically best suited for its lower-end phones. If you recall, Google (GOOG) partnered with T-Mobile to launch its first phone, the geeky G1, last month.
This is a fine deal for Yahoo, but it makes the assumption that people will use the search engine they’re forced upon, versus choosing the one they like the best.
Long term, we’re not so sure about that. Right now, the user interface is terrible enough on most mobile Web browsers that we can see why people would use the search tool they’re handed. But as phones keep getting better, we think people are smart enough to navigate to the search engine they prefer — likely Google — versus the one they’re handed.
So far, this is mostly a theoretical market: Only about 7.7% of U.S. mobile subscribers use search on their phones, according to comScore M:Metrics. And as on the Web, Google is whipping its competition: 60% of mobile users use Google, compared with 36% for Yahoo. But we’re not sure how many of those searches were done on default search tools versus search engines people picked themselves.
T-Mobile can use any boost it can get to attract more of its subscribers to the mobile Web. It lags its competitors by a long shot getting customers to pay for mobile data services, such as mobile Web access and text messaging. Last quarter, T-Mobile subscribers spent an average $8.90 per month on data service, compared to the $12-16 its larger rivals’ customers spent monthly at AT&T (T), Verizon (VZ), and Sprint (S). One excuse: T-Mobile has lagged its rivals rolling out its fast, 3G network. Once that expands, it should attract more mobile Web traffic.
Verizon is close to signing a bigger deal with Microsoft (MSFT), which would bring in $550 million to $650 million in guaranteed revenue a year.
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