Yahoo! Finds a Mobile Home

It gains an edge on Google in the red-hot wireless search business.
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Yahoo!

(YHOO)

is putting its stamp on the mobile Web.

The Internet giant announced this week that its mobile oneSearch service can be accessed from about 85% of U.S. mobile phones. Yahoo! is betting big on oneSearch, a beefed-up version of an offering that debuted in January that will serve as the default page for Yahoo!'s Web browser.

The quick, high-profile rollout of oneSearch signals that Yahoo! intends to push its advantage in this emerging space over

Google

(GOOG) - Get Report

. Yahoo!'s service counts 7% of mobile users as customers, compared with only 4% for Google, according to research firm M:Metrics.

And while Google has publicly said it doesn't expect mobile to boost its bottom line until 2008, Yahoo! seems to think the time for a thrust is now.

"This will be the year that is the tipping point for mobile and mobile search, and we are going all out to win that," Yahoo!'s director of mobile Web, Lee Ott, said in an interview. Ott said that the combination of Yahoo!'s search strength, partnerships with content providers and editorial capabilities are what give it an advantage when it comes to mobile.

Indeed, while Google's lead only seems to be expanding in the desktop space where Yahoo! once ruled -- figures released earlier this week by research firm comScore showed that Google continued to gain market share in February, while Yahoo! remained flat -- the mobile Web provides Yahoo! with an avenue that plays to its strengths.

And ironically, Yahoo!'s relative lack of technical sophistication when compared to Google may give it an advantage when it comes to mobile. That's because unlike Google, the older Yahoo! chose to develop much of the content users navigate to through its homepage, or to work closely with other content providers.

On a PC, Google's famously powerful search algorithm quickly guides users to whatever information they seem to be searching for, thereby mitigating the need to create much of its own content or work very closely with other partners.

But in many ways, the emerging mobile frontier is a throwback to the earliest days of the Web. With small screens and keyboards, navigation is a hassle and a far cry from type of expansive Web surfing PC users have grown accustomed to. This in turn puts a premium on being able to serve up the relevant information quickly and predictably. This can give Yahoo!, with its enormous reservoirs of content, an edge.

This content, which includes everything from restaurant reviews to stock prices, is especially powerful when tied into the oneSearch platform, which allows users to tap into it through keywords. Typing in "pizza," for example, would identify not just local pizzerias but ratings and comments entered by other Yahoo! users. Looking for "apple," meanwhile, would pull up the

Apple's

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financial information and also locate stores in the area.

Typing in "apple" on a Google mobile device, on the other hands, draws up a list of links, the first among which is to the company's Web site. While that's fine for a PC-based user, it's less useful to a Web surfer than taking a guess based on the context of the search.

"This is a big move for Yahoo! and goes against the notion that Google is ahead in every way," said Tim Boyd, an analyst at Caris & Co. "When you look at Google's approach, it's not really differentiated from the way they do search on the PC."

Boyd said the next logical step for Yahoo! is to push mobile hardware markers to include the service as a default on their devices. But that will not be easy, given how hotly contested and highly lucrative the mobile space is expected to be. Google CEO Eric Schmidt has repeatedly talked up the prospect of mobile search as of late. He revealed during the company's fourth-quarter conference call with investors that Google had evidence that revenue there dwarfed that of PC-based search.

Google's obvious focus on mobile search and reputation as a generous business partner may make mobile device makers think twice about getting too close to Yahoo!, Boyd says. That's especially true now that search providers often have less power than the partners providing them traffic, as was recently illustrated

in the back and forth between Yahoo! and

AT&T

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.

Google, for its part, can hardly be expected to stand still. During the company's last conference call with investors, the company said it is investing heavily in mobile technologies -- but that investors should not really expect to see the impact on its financial performance from mobile until 2008.

And while it doesn't have Yahoo!'s content reserves, the amount of cash it brings to the table will make it a keen competitor.