By Falguni Bhuta

Yahoo may have fallen behind Google on the desktop, but Yahoo is looking to strike back in the fast-moving mobile search business. The two web companies made simultaneous announcements at the Consumer Electronics Show in Las Vegas Monday about their plans for the mobile search market.

Sunnyvale, California-based Yahoo announced the Yahoo! Go for Mobile 2.0 on Monday, an upgraded mobile search service that will be available to users on more than 70 devices starting now and more than 400 devices by the end of the year. Meanwhile, Mountain View, California-based Google announced a partnership with Samsung that will provide easy access to Google on Samsung’s phones.

The stakes are high. Cell phones are becoming a dominant device in a consumer’s life. The number of mobile devices worldwide outnumbers PCs by more than 12 times, according to Yahoo. And with consumers in the developing world getting their first taste of the Internet on phones, rather than PCs, whoever dominates mobile search will get first crack at some of the world’s fastest growing markets. The market for mobile advertising is expected to reach about $2.5 billion by 2010, said Oppenheimer & Co. analyst Sasa Zorovic.

“A lot more people have mobile phones than computers and the trend is only continuing particularly in fast-growing economies like India, China, Russia, and Brazil,” Mr. Zorovic said. “So reaching people on their desktop isn’t really where the action is, it’s really the mobile phones.”

Little wonder Yahoo plans to become the top provider of mobile search services. With Mobile 2.0, Yahoo is offering a feature called oneSearch that will give consumer instant answers to their questions. The service will allow users to get instant answers to their question when they search on mobile phones as opposed to getting a list of web sites they have to click on to search for answers. The service is available starting today.

Yahoo also announced closer ties to handset makers Motorola, Samsung, and Research in Motion (RIM), who will put Yahoo’s services on their phones. At CES last year, Yahoo had made similar announcements with phone makers Motorola and Nokia to install Yahoo search on their devices.

Yahoo is also working with software companies such as browser-specialist Opera. Oslo, Norway-based Opera said Yahoo would become the exclusive provider of mobile search on its web browsers for the mobile phone.

While Yahoo is moving quickly, Google isn’t standing still either. Its new partnership with Samsung will allow users to search for information, find locations and check email in early 2007. Samsung has already launched one of its models, Ultra Edition 13.8, with Google mobile search and Gmail.

Obstacles

Even as Google and Yahoo fight it out for the top spot in mobile search, however, problems remain. Neither company will likely be able to generate significant revenues until 2010, Oppenheimer’s Mr. Zorvic said. In addition tiny keys and dinky screens pose ease-of-use problems that will be hard to overcome.

As a result, the mobile Internet market in the United States remains confined to a small slice of the overall mobile telephony user base. the According to Jupiter Kagan survey in 2006, 10 percent of cell phone users in the United Sates browse the Internet on their mobile phones, 3 percent browse on a regular basis, 3 percent use text messaging to do text-based search, and 5 percent are using one of the main Internet portals to do mobile search.

Finally, Yahoo and Google are not alone in the race to win the mobile search market. Competitors such as MSN, AOL as well as wireless carriers and handset manufacturers are trying to get a piece of the pie.

Those carriers could prove to be daunting competitors. While Yahoo and Google may strike deals with handset makers, carriers may object to pre-embedded software on phones which compete directly with the services they provide, said Julie Ask, analyst with Jupiter Kagan. “[Mobile carriers] want to control the experience and they don’t want to do things that will conflict their own business models,” Ms. Ask said.