Yahoo challenges Google in mobile phone market

After falling behind rival Google in the online realm, Yahoo is looking to turn things around in the quickly growing mobile phone market.

The Internet company used the CTIA Entertainment & IT cellular show in San Francisco Wednesday to share a few announcements that it hopes will lay the groundwork for a successful expansion into mobile, including a new social communications service for the iPhone and an expanded development platform for developers.

It's still early yet in mobile, and the dollars at stake pale in comparison to online ad revenue. But Yahoo, which has been building up its mobile offerings for years, is intent on capturing the potential opportunity created by 3 billion mobile users worldwide.

"We want to create and enable a mobile ecosystem for billions of users," said Marco Boerries, executive vice president of Yahoo's Connected Life division. "We're turning everyone that uses voice today into a mobile data user."

Boerries said its oneConnect service, a social address service that marries a cell phone contacts list with social networks, is premiering on the iPhone and iPod Touch. The service, which is available now in the Apple App Store, allows users to pull their friends and contacts together into one application, enabling them to communicate via instant messaging, e-mail, text messaging or phone. The application also lets users get updates and check in on their friends across a variety of social-networking sites, from Facebook and MySpace to Bebo and Twitter.

Yahoo also is expanding a new development language to help developers build applications easily for mobile phones. Using a language called Blueprint, which Yahoo took five years to build, developers can create applications and Web sites at once that will run on a variety of operating systems and devices.

The applications can work through Yahoo's Go mobile information service, or they can be built directly for mobile phones that can handle them.

AT&T said Monday that Yahoo is being used as the default search engine on its MEdia Net portal. Yahoo's oneSearch service will allow customers to get news, weather updates, Flickr photos and online information from MEdia Net Portal.

Yahoo's moves are intended to keep pace with and exceed archrival Google. Google is developing its own mobile operating system called Android, which make its first appearance later this year with T-Mobile.

The online search leader also is reportedly close to securing a deal with Verizon Wireless to be its primary Web search provider. And it continues to offer mobile applications for a wide variety of mobile phone platforms, including a search tool made for BlackBerry phones, which was announced Wednesday.

So far, Google is enjoying a lead in mobile search similar to the one it has online. It commands 61.5 percent of the online search market compared with 20 percent for Yahoo, according to Nielsen Mobile and comScore.

But analysts said it's still early in the game, with ad revenue much smaller than online, although it's expected to jump in the years to come. That's why Yahoo is so intent on taking the fight to Google in mobile.

"This is a critical push for Yahoo so they don't cede that area as well to Google," said Roger Entner, an analyst with Nielsen IAG. "This is the new growth area. If you're not playing here, you can pack up and go home."

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Waiting for the Zune Generation

On Wednesday, Adam Sohn, the head of public relations for Microsoft’s Zune division, told me: “Babies are born every day without an iPod. We will get there.”

That summarizes the challenge Zune faces from Apple — and Microsoft’s determination (at least for now) to meet it.

It’s hard enough trying to make a product that is more attractive, innovative, easy to use and cool than Apple does. But now many iPods are replacements by people who already have substantial music collections in iTunes. For those people, the choice is between buying an iPod that will simply work with all their music or investing the time and effort to try to convert everything into Zune’s formats.

No wonder that after two years in the music player business, Zune only has a 2 percent market share.

When the Microsoft delegation arrived last year to unveil the second generation of players, Chris Stephenson, Zune’s marketing head, said the company’s low market share in its first year was because it had only offered a hard-drive model at the high end of the market. With the addition of less expensive flash players, starting at $149. Mr. Stephenson said the company hoped to vault to No. 2 in the market, leaping past SanDisk.

“Fifteen percent [market share] would be great for us,” he said.

SanDisk still sells four times more music players than Microsoft does.

On Wednesday, Mr. Sohn dismissed SanDisk because most of its sales were for players that cost less than $100. Microsoft would rather add more features and sell players at higher price points, he said.

When Mr. Sohn got to the demo, I didn’t see anything in the third generation of Zunes that is going to shake up the market. Like Apple, it added capacity at its existing price points. It’s got a little trick to let you identify songs you hear listening to the FM radio and buy them from Zune’s music store.

Two years after introducing the only really groundbreaking feature on the Zune — its WiFi access — Microsoft finally will let users buy songs directly on the device using the WiFi. (Yes, Apple, which has had WiFi devices since the iPhone and iPod Touch, added wireless purchases last year.) And Microsoft has made a variety of tweaks to its PC software and to the social network it introduced last year.

I asked Mr. Sohn what the company’s research showed for why people actually bought the Zune. All these small-bore features, including the vaunted social network, weren’t on the list.

Some like the FM radio, he said. A geeky hard core likes the fact it can sync music with a computer over WiFi. And some video fans liked that the screen size of the hard-drive Zune was bigger than the iPod classic. He admitted that the new $229 starting price point for the iPod Touch, which has a larger screen yet, was going to cause some trouble in that corner of Zune’s tiny market.

Speaking of the Touch and the iPhone, I asked Mr. Sohn why Microsoft wasn’t adding more really innovative features. The evolution of music players into flexible handheld computers should play into Microsoft’s strengths as a maker of broad platforms.

Microsoft, Mr. Sohn said, is sticking to its initial conception that Zune is product that is devoted to music primarily and video secondarily. Microsoft’s entertainment and device unit, under the leadership of Robert Bach, tries to have much more focus and clarity than most other parts of the company. The Windows Mobile division, which Mr. Bach also oversees, makes software for smartphones, and one of these years will have an answer to the iPhone.

But even in music and video, it seems like Microsoft is missing the opportunity to make Zune a much more interesting platform. Most significantly, to my mind, is whether the devices can offer much more free content by the artful use of advertising. Unlike Apple, Microsoft has a big division devoted to advertising. The WiFi connections on all the Zune players would be ideal to stream ad-supported video and maybe music.

We’re working on it, Mr. Sohn told me. But last year J Allard, a top strategist for Mr. Bach, described an elaborate vision for Microsoft to be in the center of all media, none of which has come to fruition so far. Meanwhile, Apple continues to weave its way deeper and deeper into the music, video and now telephone business. And it has a shot at defining the next platform for handheld computing as well.

No wonder that Mr. Sohn is looking to this year’s crop of newborns as the real target market for Zune.

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Hewlett-Packard unveils notebook PC that runs 24 hours on one charge

Hewlett-Packard Co., the world's largest personal-computer maker, introduced a notebook PC that can run for as long as 24 hours on a single battery charge.

Customers would have to buy an optional battery, a special display and a so-called solid-state hard-disk drive to get the extended running time, Hewlett-Packard said. With those options, the EliteBook 6930p costs about $2,200. After an online discount, the price will be $1,816.

Hewlett-Packard has added new PCs over the last two months to capture consumer demand for notebooks and extend its lead over Dell Inc. The new notebook will compete with Dell's Latitude E6400, introduced in August, which can run for as long as 19 hours on a single charge.

The company's notebook sales rose 26% in the quarter ended July 31, while desktop revenue increased 6%. PCs account for a third of the company's revenue.

Customers wanting the 24-hour battery life will also have to download additional graphics and system software, HP said. The machine will be available in October.

A basic version of the PC costs $1,199, Hewlett-Packard spokesman Mike Hockey said. The additional battery costs $150, and the solid-state hard disk, which stores information on chips rather than a magnetic disk, is an extra $900.

Shares of Hewlett-Packard, based in Palo Alto, rose 86 cents to $45.74.

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