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A Yahoo! phone? Nokia can help

Deal bypasses network operators

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Heads rolled at Google last year when the New York Times revealed that the company was considering a Google-branded phone. Unfortunately, it was the wrong set of heads: the leakers, rather than the executives responsible for hatching the idea, were sent packing. As anyone from Nike to Claudia Schiffer can testify, branding a phone or a PDA has proved to be an expensive vanity exercise.

Wise to this, Yahoo! has teamed up with Nokia to encourage phone buyers to use its mobile services. Nokia will bundle a number of Yahoo! binary applications with selected Series 60 Symbian phones. The worldwide deal encompasses major Asian and European markets but not, as yet, the Americas. Initial devices supported will be the nokia 6680, 6681 and 6630 with more to be announced later this week, and the services on offer will initially encompass messaging and personalization downloads such as ring tones.

The deal is sure to make carriers nervous.

The network operators have sought to position themselves as the punter's default gateway to mobile data, and they act as an intermediary between the mobile content providers and the handset manufacturers. Of course this deal potentially cuts them out of the picture, and the prospect of taking a revenue cut from every transaction - a model that DoCoMo has proved can work - disappears with it. It could turn out to be as much of a threat to the network operators as Apple's iTunes phone which we discussed here last week.

Yahoo! has almost 9 million subscribers - small beer compared to a Vodafone or a Cingular, but the cost of acquiring a customer is much smaller and the churn is much lower, so Yahoo! customers are in it for the long run. Yahoo! has the edge over arch-rival Google in making its services mobile-friendly, although Google recently added image search and local search to its mobile offerings, and offers an SMS interface to its main search index. Which in turn (thanks to Erik Thauvin) has spawned a nifty Java applet. So software as a service can also be ... er, software. ®

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