Yahoo! Sees Comeback With Mobile Search

The Web giant's mobile efforts could help it reclaim its reputation as an innovator.
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Marco Boerries, immaculately dressed in suit, tie and matching black handkerchief, is in sharp contrast to

Yahoo!'s

(YHOO)

garish, purple-plastered, Sunnyvale, Calif., headquarters.

Boerries, senior vice president of Yahoo!'s connected-life division, should stand out. His unit, responsible for the Internet giant's efforts in the rapidly emerging areas outside of PCs, such as mobile devices or gaming consoles, again took center stage with announcements of Yahoo!'s new initiatives in the mobile space.

The company on Monday introduced a new ad platform on its Yahoo! Mobile Web service in 19 countries across Europe, Asia and the Americas, and beefed up its high-profile oneSearch service, which makes it easier for mobile users to find content on their devices.

The new additions to oneSearch include features that allow users to search directly from maps and enable them to share search results and news articles with others.

The announcement also comes on a day when rival

Google

(GOOG) - Get Report

announced that it had agreed to a deal with

Vodafone

(VOD) - Get Report

, the world's largest mobile phone network, to provide its own mobile maps. This demonstrates that the race is on in this lucrative space.

During

Google's fourth-quarter conference call at January end, CEO Erich Schmidt said that the company believed that mobile ads would be much more richly rewarded than those delivered to stationary devices.

"It looks like the advertising revenue on a per-search query is likely to be significantly higher on mobile than on nonmobile devices," he said.

Although when it comes to PCs, Google is dominating Yahoo! -- Google earns more money per search and is garnering an increasing share of the search market -- it just may be Yahoo! that has the edge when it comes to mobile search.

With its inherently limited functionality and emphasis on crude, effective navigation, search on mobile devices parallels navigation on the Internet of early days, a time when Yahoo!, originally a directory of listings, thrived.

But now, the company's content-rich approach could become an enormous asset in the emerging mobile space.

Content Stakes Its Claim

A more limited but convenient way to navigate the mobile Web is at the heart of the oneSearch service. Rather than offer users a list of links to other destinations, as do searches on PCs, oneSearch delivers users directly to the content it believes surfers are seeking.

Yahoo!'s massive reservoir of high-quality content, be it movie listings or stock market information, fits nicely with this approach.

Google, on the other hand, was a creature of a more evolved Internet. Thanks to a powerful algorithm, the company's ability to enable users to search astoundingly well through a mushrooming Internet is its key to success.

Google's comparatively light approach to content -- why pay for developing your own, when you can profit from directing people to that of others? -- has worked brilliantly in the sophisticated world of PC navigation.

But in a setting were surfing can be painstaking, the ability to simply route users to a company's own content presents a considerable advantage.

The hallmark Google search box may be less valuable on a mobile device than Yahoo!'s stock of content, which it easily points users to. And Yahoo! has given lots of thought about how users access information on mobile devices compared with how they do so on PCs.

Most prior attempts to port the Internet to mobile devices failed mainly because they sought to only reproduce users' experience on the PC, Boerries says.

For Yahoo!, which has dropped the search ball in the PC-based arena, emerging markets such as mobile devices offer a chance at redemption.

While the company is only now launching an ad ranking system that can compete with Google's, it's the nascent markets that offer Yahoo! a shot at becoming the innovator it was a decade ago.

But the riches that await are clear to Google as well, and the search giant is particularly aggressive when it comes to international markets, where accessing the Internet from mobile devices is more prevalent than in the U.S.

In the fourth quarter alone, Google announced new partnerships with

China Mobile

(CHL) - Get Report

and South Korea's

Samsung

and

SK Telecom

.

"Our users also need to reach us on multiple devices from any location, so mobile and global markets are an integral part of everything we do," Google co-founder Larry Page said on the conference call.

His company does not expect to see revenue rolling in until 2008, but it considers 2007 a year crucial year to grab land in the space.

Mobile also makes up a cornerstone of Yahoo!'s plans. "With the launch of several key new products and strategic partnerships, we have demonstrated our intention of becoming the No. 1 player in mobile, mobile search and mobile monetization," CEO Terry Semel said in the

company's fourth-quarter conference call .

Though Google just announced a deal with Vodafone, Yahoo! already had an arrangement to provide graphical advertising with the mobile giant -- a category it leads.

Investors, for their part, are expecting big things from both companies when it comes to their mobile plans -- especially Yahoo!'s

At $456.26, Google currently trades at about 25 times earnings. Yahoo! at $29.27, meanwhile, trades at slightly above 40.