Verizon has tapped Microsoft to provide search services for its mobile phones.
Verizon Chief Executive Ivan Seidenberg said on Wednesday that Microsoft CEO Steve Ballmer would formally announce the deal later today at the Consumer Electronics Show in Las Vegas, Reuters reported.
In November The Wall Street Journal reported that sources familiar with deal said Microsoft would share revenue with Verizon from ads displayed on cellphones when users conducted searches. Microsoft would offer guaranteed payment to Verizon for about $550 million to $650 million over five years.
“It’s certainly a feather in Microsoft’s cap. Tough news for Google and tougher news for Yahoo,” CCS Insight analyst John Jackson said of the agreement.
Jackson said the deal would probably not change how many Verizon Wireless customers user their phones to browse the Web. He said Google may have been the better choice to enable Verizon to offer customized Web services, such as offering targeted ads that are relevant to users.
“The ultimate goal in mobility is contextual awareness and the delivery of highly personalized experiences,” Jackson said. “These are competencies Google has in spades, so it may be that Verizon’s customers ultimately end up with an inferior experience relative to what Google might enable.”
Verizon is expected to finalize its $28.1 billion purchase of Alltel on January 9, which would add almost 14 million subscribers, surpassing AT&T making the company the No.1 U.S. mobile carrier.
