Microsoft scores deals for Live Search

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Ina Fried CNET News

Published: 08 Jan 2009 18:29 GMT

…to pay for the Verizon deal. Details about Yahoo's deal with AT&T announced last year weren't disclosed either, but it's believed that Yahoo promised AT&T about $400m in guaranteed revenue to become its default search provider.

As for the details of the Microsoft/Verizon deal, starting in the first half of this year, Microsoft Live Search will be preloaded on new Verizon Wireless phones and smartphones to provide all local and internet searches. Microsoft will also power search for Verizon Wireless's VCast content, allowing subscribers to search for ringtones, full music tracks, videos and other VCast entertainment content and news.

Depending on which device they use, Verizon subscribers will be able to search for content either by voice command or by typing their queries. And the search tool will also provide location-based results, meaning subscribers will be able to search for restaurants, cinemas and other businesses nearby.

Also as part of the deal, Microsoft will manage all search and display advertising for Verizon's mobile web services.

Today mobile search is still in its early days. Only about nine percent of mobile-phone subscribers search the net from their mobile phones, according to ComScore M:Metrics. But usage is growing, especially as more consumers upgrade to smartphones such as Apple's iPhone or Research In Motion's BlackBerry devices.

Despite its small size today, the big search companies see the mobile market, with more than three billion subscribers worldwide, as a huge opportunity. Winning Verizon Wireless, which is currently the second largest mobile-phone carrier in the US, is a big deal for Microsoft. Yahoo is powering search for AT&T, the largest mobile-phone US carrier. And Google has a deal with Sprint Nextel, the third-largest US operator.

But it's still unclear how important these carrier deals will be. Microsoft and Yahoo have previously struck similar multi-year portal deals on the PC side with Verizon Communications and AT&T, but Google still dominates the overall search market. And just as they can on the PC, users still have the option to use any search engine they wish from their cell phone browsers.

So far, Google has managed to continue its search dominance on mobile devices with 60 percent of mobile subscribers who search the internet from their phones using its search engine. About 36 percent of subscribers use Yahoo and 10 percent use Microsoft, according to ComScore.

Google may also have another advantage in mobile, as carriers start rolling out more devices that use its Android operating system. Android is an open-source mobile operating system that tightly integrates several Google services into phones, including Google's search products.

So far, T-Mobile is the only carrier selling a Google phone, the G1. But other Android phones are expected to hit the market later this year. HTC, the maker of the G1 is planning another Android device, as is Sony Ericsson. Motorola has also said it plans to use Android as one of its main operating systems in future phones. And LG and Samsung, members of Google's Open Handset Alliance, are also expected to release Android phones.

This story was co-written by CNET News.com's Marguerite Reardon.

Credit: Microsoft strikes deals for Live Search from CNET News