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The Mobile Internet Won't Grow Without Effective--And Profitable--Search

When the biggest companies in the mobile phone industry gather this week in Barcelona, Spain, for the 3GSM World Congress, rolling out new phones and services to get customers onto data networks, one question will linger in the background: When will search, that most profitable and powerful tool of the PC-based Web, get serious on mobile devices?

Google and Yahoo are charging hard, along with others including startups, but the business is young enough to be up for grabs. Google and Yahoo often partner with wireless carriers and device makers trying to boost data use. But none of these companies has yet nailed the technology or business model that's going to drive mobile search.

HP's new iPaq phone: born to search and talk

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Yahoo is convinced it knows where the profit will come from: advertising. The company started experimenting in October with a service that includes sponsored text links from a select group of advertisers on the Yahoo Mobile Web in the United States and the United Kingdom. It followed up with graphical ads, allowing ads to show up as images alongside search terms. Yahoo is partnering with Vodafone in the United Kingdom to serve up mobile ads to subscribers who agree to them, in exchange for lower data-service prices from Vodafone.

Google is testing mobile ads with wireless carriers in 13 countries, including Vodafone in Europe and NTT DoCoMo in Japan. Google gets 99% of its revenue from ads, but it isn't certain they'll be the heart of its mobile business model. "We don't really know what it is because we haven't seen very consistent patterns for how people use cell phones for data," says Deep Nishar, director of product management at Google. Gartner says data services are too expensive for extensive use, and ad revenue for mobile search is almost nonexistent, since wireless carriers mostly offer search as an added attraction.

Cell phone users have two mobile search options today, Gartner says. One is WAP portals or downloadable software clients from Google, Yahoo, and Microsoft, which offer results that largely are scaled-down versions of Internet content. The other is mobile search engines designed specifically for cell phones and integrated into wireless carriers' portals. They typically address cell phone limitations, such as reducing the number of keystrokes needed to enter a query.

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