Nextel Strikes Content Deal With Yahoo!

Yahoo! made a deal with its fifth of the 5 major US wireless carriers to provide content and wireless applications to Nextel. The Yahoo!/Nextel deal will put e-mail, IM, games, and news content on Nextel’s Motorola phones. While this seems like a standard content deal, I’ve been advising my carrier clients for some time to be wary of what kinds of partnerships they forge with major portals. Specifically, introducing Yahoo! IM on the phone strikes me as a bad move. In business, we learn to focus on our core service, and gain efficiency by outsourcing non-core functions. Thus, carriers have outsourced games and content, for example, to portals, developers, etc. However, I propose that the core for carriers is, in fact, communications services (duh!). Now, doesn’t a Yahoo! IM app on a Nextel (or Cingular) phone compete directly with communications services powered by the carrier (PTT, SMS, voice calls)? Sounds like a wolf in sheep’s clothing. Carriers who allow fully branded, competing communications services on their networks and subsidized terminals risk becoming dumb pipes – and earning the name.

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