Sprint, Microsoft Go Local

Like a pair of sumo wrestlers deciding it's better to wed than wrestle, Sprint Nextel Corp. (NYSE: S) and Microsoft Corp. (Nasdaq: MSFT) today announced a "strategic alliance" that will bring content and mobile search applications from the Redmond, Wash.-based software giant to Sprint customers using the No. 3 U.S. wireless operator's high-end PCS Vision and PowerVision networks.

The first fruit of the partnership, which has been in place since early summer, gives Sprint customers access to Windows Live Search on their mobile phones to search for localized content and information, such as nearby restaurants, based on their current whereabouts. The application will also give users access via Windows Live to Sprint add-ons including "ring tones, games, screen savers, and related services," according to the two companies.

According to Michael Inserra, Sprint's director of strategic alliances, the two companies are "exploring models" for targeted advertising based on users' locations. The ads would be served up via Microsoft's adCenter platform, and the two companies will split the revenue. The alliance, a three-year agreement that is non-exclusive for both parties, covers not only products and services but joint sales efforts as well, Inserra adds.

"This will work at a high level, but it's also very broad," Inserra explains, "it's not just about products or technology but it covers all areas of the business for Microsoft and for Sprint -- all of our customer segments including consumer, gen business, [large] enterprise, and even the public sector."

This marks the second foray in two days into mobile, advertising-based search ventures for Microsoft's mobile applications unit, which has been late to the game compared to rivals Google and Yahoo. Yesterday the company said it will collaborate with MetroFi on the citywide WiFi network in Portland. (See Microsoft Takes Muni WiFi Plunge.)

"Yes, we were later getting started than some of our competitors in this space," acknowledges Darcie de Frietas, Microsoft's product manager for Windows Live Search for mobile devices. "But particularly in local search we now feel we're the leaders. This is an area we've identified as very important to our consumers, and we're focused on getting it right both on the mobile side and on the PC."

Indeed, by some estimates the mobile advertising market could generate some $10 billion in revenues by 2010.

Available immediately, the initial collaboration between Sprint and Microsoft requires a user to type in his zip code or address to receive targeted content and information on local services. In the future, says Inserra, GPS-equipped devices will automatically pinpoint users' locations.

The drive into location-based services complements Sprint's advanced high-speed networking plans for the future, as well. Sprint has already deployed broadband EV-DO "Rev A" connectivity in eight U.S. cities (including four new ones on the East Coast today), and the company announced in August that it will spend $3 billion to develop a nationwide WiMax network over the next three years. (See Sprint Goes WiMax.)

Sprint needs to field a new set of services and new network capabilities to offset the widening gap between it and its two larger competitors, Cingular Wireless and Verizon Wireless . In August, Sprint axed its COO, Len Lauer, after reporting a 38-percent drop in quarterly earnings and fewer new subscribers than the Top 2 carriers. (See Sprint Cuts COO.)

As for Microsoft, it remains to be seen whether the universality of Windows, not to mention MSN content and the Live Search capability, can be translated to the small screen.

"We're a company that has had a lot of success developing software that millions and millions of people can use," says de Frietas. "And our goal is to bring that expertise to mobile search, by making it an experience suitable for mobile phones, with all the constraints and opportunities that entails."

— Richard Martin, Senior Editor, Unstrung