Nov 20th, 2008

In a surprising move, T-Mobile has chosen Yahoo’s OneSearch search engine on its phones according to a Yahoo executive. Considering the relationship between Google and T-Mobile with the launch of the G1 – the first ever Android phone – you would expect Google to have somewhat of an inside track on the deal.

But as they say, business is business and Yahoo must have simply put a better offer on the table… right? Afterall, this deal will likely transcend MANY phones. Although no official statement has been given, you can assume the Yahoo search won’t become the G1 default search but nothing is guaranteed.

This would be a HUGE win for Yahoo. While Yahoo has deals with 26 mobile operators around the world which have 850 million subscribers, the companies real and perceived value has done nothing but plummet lately starting with a botched Microsoft takeover and hopefully for them, ending with the resignation of CEO Jerry Yang after the stock price dropped from $30+ to just over $9 in the span of a few months. Microsoft offered to buy the company for $30+ per share, a move that Yang and company rejected in a bluff gone bad.

While Google is (according to most) the dominantly better search engine, that doesn’t matter so much on mobile phones. Consumers are much less likely to download and use applications and extras on their mobile phones and are MUCH more likely to go with the default capabilities. Its the same reason Microsoft’s Internet Explorer has dominated the Browser Wars for so long… and that same initial real estate stakes era is occurring in the mobile world as we speak.

It looks as if Yahoo won this battle, but who will win the war? Remember that Microsoft is also in the process of stealing Verizon’s default search from underneath Google’s feet which would take 2 US based carriers off the table and leaving AT&T and Sprint.

Microsoft has Windows Mobile and Google has Android, giving these two giants anchors in what appears to be a period of turbulent growth. Economists are suggesting that a number of carriers and/or manufacturers will either be purchased, merge or close shop in the next 12 months and a large number of interesting scenarios could present themselves.

What would be the most interesting scenario? If you ask me, it would be Apple buying Yahoo… and at $10 a share, it seems to be a pretty good bargain.

[Via InfoWorld]

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