• Forbes.com, Tuesday, May 20, 2008 10:45 AM

As Microsoft and Yahoo continue to discuss an unspecified relationship, Forbes.com's Brian Caulfield makes the case that uniting in the battle for control of the mobile phone could be every bit as important as a search combination to the two companies, who face fierce competition from Google on both fronts. In the mobile market, Microsoft has negotiated with handset makers to get Windows Mobile on their phones, while Yahoo has done an even better job negotiating with the carriers to get exclusive placement for its mobile applications on their networks.

Google, meanwhile, is forcing its way into both markets on its own, although Android, its operating system, isn't ready yet. Apple, too, is quickly seeing the iPhone and its OS X operating system gain market share. Given Google's chummy relationship with Apple (Google CEO Eric Schmidt sits on the Apple board), we will undoubtedly see more Google apps embedded into future iterations of the iPhone.

As Caulfield points out, Microsoft is already falling behind Apple in the market for non-converged mobile devices. Meanwhile, analysts expect Yahoo to lose out to Google in getting its applications embedded on the forthcoming 3G iPhone. Because of this, Caulfield said Microsoft and Yahoo would do well to join their applications and operating system under one roof, to give carriers and handset makers a one-stop shop.

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