In a loss for Google, Verizon Wireless on Wednesday selected Microsoft to provide portal, local and Internet search as well as mobile advertising services. The five-year agreement will begin in the first half of the year, with Microsoft Live Search available on new Verizon Wireless feature phones and smartphones.
Microsoft CEO Steve Ballmer said mobile search and mobile advertising offer tremendous opportunities for innovation and growth. As he sees it, Microsoft is in a unique position to deliver a fully integrated, voice-enabled solution for Verizon's customers.
"We are confident that our advanced mobile-search and mobile-advertising technologies will help consumers get the most out of their mobile computing experiences and help advertisers reach consumers who are on the go more effectively," Ballmer said.
What This Means for Customers
Verizon has its eye on the rapid adoption of a variety of data services and substantial changes in the way wireless customers use their devices. Verizon said both factors are driving the need for new ways to organize and deliver the content customers want.
With Microsoft's Live Search capabilities integrated onto its handsets, Verizon said its customers will have easier access to context-relevant search results. Some devices will also make way for voice-enabled search and location-aware searches that yield maps, directions, traffic information, movie theaters and show times, gas prices, and weather. Verizon said customers will get news and entertainment content such as downloadable full-track songs, videos and games.
Under the terms of the agreement, Microsoft will manage search and display advertising on Verizon Wireless' Mobile Web service, creating a one-stop integrated way for advertisers to reach mobile consumers. Verizon customers will be able to access Microsoft Live Search from a device's home screen, by downloading an application, or through Verizon's service.
Verizon's Search Bet
Wireless data now represents more than 25 percent of Verizon Wireless' revenue. Getting wireless search and advertising done right is critical to continuing to make wireless content relevant, according to John Stratton, Verizon's chief marketing officer.
"Wireless customers are increasingly using their phones to access the Web, browse and buy all forms of music, video, games, and to look for relevant local information," Stratton said.
"We're teaming with Microsoft to make the emerging wireless experience accessible and easy for customers," Stratton added. "Microsoft's Live Search for mobile brings innovation, tremendous resources and expertise, all dedicated to meeting our strategic objective to deliver the best search, discovery and advertising experience."
The companies declined to provide financial terms of the agreement. But Greg Sterling, principal analyst at Sterling Market Intelligence, said it's almost certain there are revenue guarantees or very aggressive revenue-sharing opportunities for Verizon.
"Microsoft has fewer advertisers than Google or Yahoo. So it's not like Microsoft is going to show up with thousands and thousands of advertisers and be able to immediately deliver lots of mobile advertising dollars to Verizon," Sterling said. "It will be something that grows."
Sterling expects the Verizon deal to give Microsoft mobile search a boost because it gives Redmond immediate access to Verizon's 80 million subscribers. It also represents a vote of confidence for Microsoft and gives the company credibility with advertisers, he said.
"Microsoft has suddenly become the go-to search engine for the largest single pool of mobile users in the United States," Sterling said. "The full impact of this deal remains to be seen. But it will certainly raise the profile of Microsoft Live Search, and it has the capacity to pay dividends on the desktop."