Microsoft advancing in mobile with Yahoo

Implications: Beyond innovation catch-up, Microsoft’s acquisition of Yahoo has three advantages from the AT&T/Yahoo co-marketing: 1) Broadband subscribers; 2) Advertising revenue; 3) Mobile migration.

Analysis: In addition to advancing from software to Internet innovation, Microsoft’s acquisition of Yahoo is providing actual subscribers instead of just the advertising clicks of the Google model.  AT&T has 14.2 million broadband subscribers.  Microsoft failed to win a contract with AT&T to displace the AT&T/Yahoo co-branding.  Yahoo renewed the co-marketing contract and expanded the relationship from PCs to mobile devices.  AT&T is eager to share in advertising revenue to overcome the declining landline market and saturation being reached for new wireless subscribers. 
Microsoft is exploiting the opportunity to migrate from the PC viewer to the mobile lifestyle of content, navigation and advertising.  The anticipated Silicon Valley “culture clash” might be insignificant for the pursuit of mobile business from the non-Valley players of carriers like AT&T, Verizon and Sprint.  The Internet experience has users, and innovation has been based on competing for engaging the user experience to attain recurring revenues.  The carriers have recurring revenues, and like the financial services industry, have ongoing customers instead of merely site users.