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Yahoo's Mobile Mandate

As it attempts to regroup from a sobering year -- when it became all too clear that Google is winning the race in Web search and advertising -- Yahoo is now diving headlong into the mobile sector.

In advance of Yahoo CEO Jerry Yang's keynote address today at the 2008 International Consumer Electronics Show (CES) in Las Vegas, the company issued a slew of announcements outlining its new mobile strategy.

The effort includes an open platform to provide third-party developers with tools to create applications aimed at expanding and improving Web content delivered to the mobile phone. Launching with initial partners that include eBay, MTV and MySpace, Yahoo Mobile Widgets are designed to run on a host of devices and, hopefully, solve the translation problem that has strained the migration of Web content from the PC to the mobile screen.

LG Electronics and Motorola are among the device makers that Yahoo has partnered with to support the new applications.

"Yahoo's ultimate goal is to bring the best possible Internet experience to the billions of mobile consumers around the globe," said Yahoo Executive Vice President Marco Boerries, speaking alongside Yang during his presentation.

"We believe that to succeed on such a scale, the best strategy is to open up our mobile platform in order to tap the innovation and talent of the world's developers and publishers," he said.

Boerries added that the widgets are accessible to anyone with a WAN-enabled handset. That means that any user of a Web-accessible phone could browse a MySpace profile or check the status of a bid on eBay with the new widgets.

Yahoo, in turn, expects the feature will drive traffic to its mobile properties.

Users will be able to browse Yahoo's Widget Gallery to cherry-pick the applications they want to customize their mobile experience. The Widget Gallery is accessible from Yahoo's redesigned mobile home page, or from Yahoo Go 3.0, the latest version of Yahoo's mobile portal. The company announced both today at CES.

Yahoo Go 3.0 is currently available on more than 30 handsets, and Boerries said that it will eventually scale to the more than 300 devices that currently support the 2.0 version, which Yahoo launched at last year's CES.

The Go portal is at the heart of Yahoo's vision for becoming the centerpiece of the "mobile ecosystem." The graphically rich design features a carousel at the bottom, where users can flip through many of the same applications that are found on Yahoo's Web site: mail, weather, news, Flickr and others.

"We're committed to creating the best and richest mobile experience for all consumers – making it extremely personalized to their individual style and needs while opening up the Yahoo mobile platform to allow anyone to participate," Yang said in his address.

Supporting the mobile Web content, predictably, will be advertising. Just as Yahoo's tools can enable developers to make widgets accessible on any browser-enabled handset, advertisers will be able to use the tools to create mobile-optimized ads that translate to any device.

With its share of the search market falling steadily while Google continues to gain, Yahoo has recently been working to reposition itself as a leader in the mobile sector. Chiefly, that's come through a spate of partnerships with carriers to extend the reach of its oneSearch mobile browser.

Though is it by no means giving up on its core Web businesses, Yahoo sees mobile as its biggest growth opportunity.

Latin America and Asia are two emerging markets where Yahoo hopes to make a big mobile splash, and a Yahoo spokesman told InternetNews.com that negotiations with wireless carriers in the United States also are ongoing.

Recently, AT&T announced at its annual investor day that it is restructuring its flat-fee contract with Yahoo to adopt an ad-based, revenue-sharing model, investment advisory firm Jeffries & Co. said in a recent report.

Under that arrangement, Yahoo would also become the default mobile browser for AT&T Wireless customers -- the first such agreement for any U.S. carrier.

In the same market report, Jeffries & Co. analyst Youssef Squali downgraded his price target for Yahoo because it will forfeit between $200 million and $250 million in annual access fee revenue in the short-term, an amount which it would not likely recoup for at least a couple years.

Fueling the rumors that Yahoo is bound for an acquisition, Squali wrote in his introductory note that even though fiscal 2008 is a crucial test for Yang and the management team to turn the company around, "we believe the turnaround's downside risk is limited by the likelihood of a sale."