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Microsoft Gains Verizon Monopoly


Five-year deal is a blow to Google, Yahoo.

And the winner in the Verizon Communications search sweepstakes is... Microsoft?

Verzion (VZ) selected Microsoft (MSFT) to provide Internet search services for the carrier's growing cell-phone network.

The 5-year deal looks like a blow to Google (GOOG) and Yahoo (YHOO), because Verizon appears set to pass AT&T (T) as the nation's leading mobile carrier with the acquisition of Alltel this week.

Starting in the first half of this year, the deal will make Microsoft search available on nearly all handsets from Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group (VOD).

But the decision, confirmed by Microsoft CEO Steve Ballmer at the Consumer Electronics Show in Las Vegas, may be a head-scratcher. The goal of mobile communications is delivering ads and information keyed to the user's location and needs. Google excels at this, and its dominance of the online-search market indicates that users prefer its technology.

In November, Google handled about 63.5% on Internet searches while Yahoo delivered 20.4%; Microsoft grabbed just 8.3%.

The Verizon deal is a huge victory for Microsoft, which needed a big win to remain competitive with Google - especially after some analysts questioned its ability to take online search and advertising revenue away from its larger rivals.

Microsoft's deal with Verizon is yet another blow to Yahoo. Last year, Microsoft bid for Yahoo, but ended discussions over a disagreement on price. Yahoo's stock then took a hit.

Microsoft also announced a similar deal to make its Internet search widely available on Dell (DELL) personal computers, and presented a preliminary version of Windows 7, successor to the much-maligned Windows Vista released 2 years ago. Windows 7 has new features intended to make the use of digital cameras and home networks easier.

Windows 7 stresses speed and is designed to run on high-end PCs, notebooks and laptops.

Apple (AAPL) made slight gains in the consumer computer market thanks to Vista's troubles - but Microsoft still runs on the greatest number of laptops and desktops.
No positions in stocks mentioned.
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