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Thursday, November 16, 2006 - Page updated at 12:00 AM

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Microsoft search service to be on Sprint Nextel phones

Seattle Times technology reporter

Searching online has become a huge industry in the past several years, but two new developments suggest mobile is the next frontier.

Seattle-based Medio Systems, which has created a search platform for cellphones, plans to announce today it has raised an exceptionally large round of venture capital — $30 million — to fuel its growth.

In addition, Sprint Nextel is joining with Microsoft to provide search capabilities on the mobile phone. That makes Microsoft the first of the three big search providers — Google, Yahoo! and itself — to form a close partnership with one of the largest U.S. wireless carriers.

"A lot of folks haven't partnered with search yet," said Michael King, an analyst at Gartner.

Some Asian and European wireless operators have staked their claims mostly with Google, but so far in the U.S., carriers have been reluctant to hand over their customers to a big-name search provider.

Until now, people mostly open a phone's browser to use the search engine of their choice. What's up for grabs is being the dominant search provider on the phone and gaining revenues by delivering advertisements based on search results.

People search on a phone three different ways.

First, they look for content such as ringtones and graphics, sold by a carrier on its phone-based storefront, or "deck".

Second, there is the "off-deck search," in which users look for information available on the Internet.

The final way is "local mobile search," where results are based on a person's location.

Medio Systems provides nonbranded searches for on-deck content. It has partnered with Verizon Wireless to offer an easy way to find content on the phone's storefront.

Bellevue-based InfoSpace provides Sprint with Find It!, which must be downloaded to the phone for a fee. Through technology on the phone, the system identifies where the user is to give search results that include the nearest bank, ATM or coffee shop.

InfoSpace also provides on-deck search capabilities.

Under its agreement with Sprint Nextel, Microsoft will provide all three for Sprint phones. The user accesses a search bar from the phone's browser. Search results may include content from the Internet, from Sprint or results based on the user's location.

Initially, users will have to enter their location manually (by ZIP code, for instance), but Microsoft hopes to make the process automatic by using global positioning.

Medio Systems is focused nonbranded technology for the wireless carrier, so that when people search for information, it appears as if the carrier is providing it.

That may be a selling point, because many carriers are reluctant to share the phone with other strong brands.

"Many operators around the world are in conversations with Medio, and the market is heating up," said Corporate Vice President Jeff Damir.

"Companies like Microsoft, Google and Yahoo! offer searches that are branded, but many would see Medio as a more operator-centric architecture," Damir said.

Medio said the $30 million being announced today is coming from Accel Partners, Mohr Davidow Ventures, Frazier Technology Ventures and Trilogy Equity Partners.

Medio plans to use the cash to develop new products and expand sales and operations for wireless operators and advertisers.

It also plans to expand to Europe, Latin America and Asia.

Microsoft gained its relationship with Sprint by purchasing Paris-based MotionBridge in February. MotionBridge had provided Sprint on-deck search capabilities.

The announcement means Sprint customers will be able to search from Microsoft's Windows Live portal.

Plans call for the service to be initially available to more than 90 percent of Sprint customers. Nextel customers are slated for later.

"In making this announcement, we are staking a claim with Microsoft," said Michael Inserra, Sprint's director of the Microsoft alliance.

Gartner's King said the announcement gains Microsoft credibility in the mobile world.

"It's a shot across the bow to Google, because they were the first search partner launched anywhere in the world," he said. "Now [Microsoft] is going to say we are going to take you on in one of the top three markets in the world."

Microsoft will have to work hard to make up for lost ground.

According to research firm M:Metrics, most searches conducted on wireless devices use Google. Yahoo! is second and Microsoft trails in third.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2006 The Seattle Times Company

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