In mobile, Yahoo brings more to Microsoft

By Georgina Prodhan, European Technology Correspondent

BARCELONA (Reuters) - Microsoft Corp's (MSFT.O: Quote, Profile, Research, Stock Buzz) intended takeover of Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) would instantly raise its profile on the burgeoning mobile Internet by adding Yahoo's range of on-the-go services to its mobile unit, until now focused on promoting its own operating system.

Yahoo has made strides in the last year to position itself for an expected explosion in Internet usage on cellphones, developing slick tools for mobile search, mail and social connections that have caught the eye of big telecoms carriers.

That strategy will likely pay off in terms of mobile advertising revenues in the medium to long term -- too late to make any difference in the face of Microsoft's unsolicited $42 billion bid, rebuffed by Yahoo as too low.

Microsoft has sought to duplicate its PC strategy with a mobile phone operating system, Windows Mobile.

But the software is in only a small proportion of so-called smartphones -- phones with computer-like functions -- and mobile users are focusing more and more on online services they can access rather than just applications loaded on handsets.

Microsoft's MSN Mobile service, offering access to its popular instant messenger as well as search, mail and news, could benefit from Yahoo's services expertise, though its perceived strong-arm tactics could upset relationships Yahoo has built with telecoms carriers.

Microsoft signaled change in its mobile strategy at this week's Mobile World Congress fair in Barcelona by saying it was buying consumer mobile software company Danger -- just before announcing that the head of its mobile unit would quit to join Vodafone Group Plc (VOD.L: Quote, Profile, Research, Stock Buzz).

"There's clearly a renewal going on at Microsoft Mobile," said Ben Wood of CCS Insight, citing Microsoft's alliance with Sony Ericsson (6758.T: Quote, Profile, Research, Stock Buzz)(ERICb.ST: Quote, Profile, Research, Stock Buzz), also announced at the fair, and a previous acquisition of voice Web search company Tellme.