• by Shankar Gupta , March 15, 2007

Microsoft finalized a deal Wednesday to purchase TellMe, a directory assistance provider and voice-activated mobile search firm, giving Redmond a possible edge in the race to develop a better mobile search tool.

Greg Sterling, principal of Sterling Marketing Intelligence, said that despite the manual dexterity mobile search users are developing, using a tiny keyboard still offers a sub-par user experience.

"There's still usability problems that are pretty significant," he said. "Keying in search queries is awkward. This is really about improving usability, and driving consumer adoption."

Microsoft is reportedly purchasing the voice-recognition and directory assistance technology firm for between $800 million and $1 billion. A statement released by Microsoft specifically called out "search services on mobile phones that integrate with Live Search for mobile offerings" as an area of interest between the two companies.

Sterling said the acquisition was mainly based on the drive to compete with Google in the field of mobile search.

"This is about mobile, more than anything else. It's about competing with Google in particular in mobile search," he said. "TellMe has a sophisticated speech platform that can be the front end for a lot of applications."

Moreover, he said, building out mobile search could give Microsoft an inroad into Google's dominance in general search.

"It's about creating a better mobile search user experience, and then hopefully gaining loyalty, but I don't know that'll necessarily translate to the desktop. It'll depend on how much better it is and how much integration there is on the desktop," he said. "It would certainly boost Microsoft's fortunes if they had runaway success in mobile with this."