SUNNYVALE, Calif. - Yahoo! announced on Monday that it will open its mobile software and services to outside developers in a strategy to better compete against mobile Web rivals Google and Microsoft.
At the start of the International Consumer Electronics Show in Las Vegas, the company also unveiled a revamped mobile home page and launched the latest version of its package of key mobile applications known as Yahoo! Go. Both services offer access to popular Yahoo! applications such as email, searching, news and photo sharing.
The strategy follows the blueprint laid out in fall 2007, when CEO Jerry Yang said the company aimed to be the starting point for most Internet consumers by creating platforms open to third-party publishers and developers. MySpace, eBay and MTV have responded by creating mobile widgets tailored to the new Yahoo! landing page and Yahoo! Go.
Yahoo! also aims to boost its share of the emerging mobile advertising market. By providing a wider range of content via outside developers, the company hopes to attract more mobile users, thus drawing more advertisers.
Developers will be offered Yahoo!'s online advertising services to help them generate revenue from mobile applications they create on top of Yahoo!'s services. Developers also will have the option to use advertising platforms from competitors such as Google in connection with programs running on Yahoo!'s mobile platforms.
Advertisers also will be able to create their own mobile sites or widgets using Yahoo!'s new development tools. Yahoo! hopes to gain by then selling ad space for advertisers to tout their new creations.
"To get the true maximum reach, advertisers will have to spend money to promote that media widget," said Michael Bayle, general manager of mobile monetization at Yahoo!.
For the first time, display advertising also will appear in the new beta version of Yahoo! Go. Bayle expects increasing mobile page views to help drive the expansion of display ads on the service.
Wireless industry analysts applauded Yahoo!'s latest efforts to create a leading mobile platform, but mentioned remaining obstacles such as Google and Microsoft's plans to push onto the mobile Web.
Google is creating an open mobile platform with a consortium of handset makers and carriers, and Microsoft acquired mobile advertising company ScreenTonic in 2007.
Wireless carriers also are starting to open up their notoriously closed networks to better compete in the expanding mobile universe. Late in 2007, Verizon Wireless said it would start allowing any device running any applications to operate on its network.
Greg Sterling, the founding principal at Sterling Market Intelligence, predicted that Yahoo! will attract its fair share of mobile developers, despite the increase in open mobile networks.
"I think it will be a significant platform that a lot of companies will want to develop applications for," he said.
Sterling said Yahoo! is, in some respects, ahead of Google's planned Android platform because a so-called "Google phone" won't be available until the second half of 2008 at the earliest.
Another obstacle for Yahoo! is that it lacks distribution for Yahoo! Go in the United States. Since the service is not pre-installed by domestic carriers, it has to be downloaded by users.
"Any time you have software that has to be downloaded, it's a barrier to adoption," Sterling said.
Yahoo! has signed deals mainly with carriers and handset makers in Europe and Asia, including Nokia, Vodafone and Spain's Telefonica. Yahoo! Go runs on about 250 devices.
When it comes to advertising, Yahoo! also faces the prospect of falling CPM and CPC (cost per action) rates because of increased mobile ad inventory through its new initiatives, according to Jeff Janer, a former chief marketing officer for the mobile advertising platform Third Screen Media and a current advisor to the mobile video startup Transpera.
But Janer said Yahoo!'s deep knowledge of its user base may help the company offset declining ad rates through more precise targeting of ads to mobile users.
Bayle, however, expects mobile ad rates to continue climbing because of growing advertiser demand.
"The biggest request we get from mobile advertisers is how to get more qualified traffic," he said.
Opus Research predicted that mobile advertising in Europe and North America will surpass $5 billion in 2012, up from about $107 million at the end of 2007.
