• by Mark Walsh  @markfwal, January 8, 2008

Vying with rivals such as Google and Microsoft to conquer the mobile Web, Yahoo announced Monday that it will open up its mobile software and services to outside developers as part of a broader strategy to appeal to as many cell phone consumers as possible.

Yahoo also unveiled a revamped mobile home page and the launch of the latest version of its package of key mobile applications known as Yahoo Go at the start of the International Consumer Electronics Show in Las Vegas.

The cell phone strategy follows the blueprint laid out last fall 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. To that end, eBay, MySpace and MTV have already created mobile widgets tailored to the new Yahoo landing page and Yahoo Go.

Both services offer access to popular Yahoo applications such as e-mail, search, news, photo-sharing and other features found on the company's Web portal.

The new moves are also aimed at boosting Yahoo's 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, which in turn will draw more advertisers.

Yahoo is offering its online advertising services to developers as a way for them to generate revenue from mobile applications they create on top of Yahoo's services. Developers will also have the option to use advertising platforms from competitors such as Google in connection with programs running on Yahoo's mobile platforms.

Advertisers themselves will also 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.

Display advertising will also appear for the first time in the new beta version of Yahoo Go. Bayle said he expected 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 said obstacles still remain. Among them are competitors such as Google and Microsoft, which are both pursuing their own plans for pushing onto the mobile Web. Google is creating an open mobile platform of its own with a consortium of handset makers and carriers and Microsoft last year acquired mobile advertising company ScreenTonic.

Wireless carriers are also starting to open up their notoriously closed networks to better compete in the expanding mobile universe. Verizon Wireless late last year said it would start allowing any device running any applications to operate on its network.

Even with the rise of open mobile networks, Yahoo should be able to attract its share of mobile developers, according to Greg Sterling, founding principal at Sterling Market Intelligence. "I think it will be a significant platform that a lot of companies will want to develop applications for," Sterling said.

Yahoo was in some respects already ahead of Google's planned "Android" platform because a so-called Google phone won't be available until the latter half of 2008 at the earliest, he added.

Yahoo's mobile expansion is also hampered by a lack of distribution for Yahoo Go in the U.S. Because the service doesn't come pre-installed by any domestic carriers, it has to be downloaded by users. "Anytime you have software that has to be downloaded, it's a barrier to adoption," Sterling said. Yahoo so far has signed deals mainly with carriers and handset makers in Europe and Asia including Nokia, Vodafone and Spain's Telefonica. It 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, formerly CMO at mobile advertising platform Third Screen Media and now an advisor to mobile video startup Transpera.

But he 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.

Yahoo's 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 predicts that mobile advertising in Europe and North America will surpass $5 billion in 2012--up from about $107 million at the end of 2007.

Ultimately, the battle to be the gateway to the mobile Web may be won by the company that provides the most user-friendly experience. "If you can become the start page for the mobile Internet, people will be less likely to switch to a competitor," Sterling said.