NEW YORK (Reuters) - Helio LLC, the mobile venture of SK Telecom and EarthLink Inc., said on Thursday it agreed to put a link to Yahoo Inc. (Nasdaq:YHOO - news)'s Web search engine directly on its cellphone screens to make it easier to surf the Web on its devices.
Helio plans to sell mobile services using rented space on established networks in the next few months and it hopes to pick up customers in the crowded U.S. wireless market by targeting its services specifically at tech-savvy young adults.
Helio and its rivals see data services such as Web surfing as a key to growth as phone call prices are falling. Web companies in turn see wireless as a growth area even though mobile Web surfing is not yet widely popular because of slow service on an awkward interface on the small devices.
Yahoo, which competes with Google Inc and Microsoft Corp. in the Web search market, already embeds its services in certain phones made by Nokia and sold by Cingular Wireless, the No. 1 U.S. service,
Marco Boerries, the head of Yahoo's wireless business, said that deals such as Helio, which allows users to open a Web search page by pressing one button on the phone, will boost usage of Yahoo's services on cellphones.
"This is one of the key steps that needs to happen to open up the mobile Internet," he said. "It's sometimes really hard and requires multiple clicks to get to the Yahoo service you want (on a cellphone)."
The companies did not disclose the financial terms of the arrangement but said that a portion of Yahoo's take depends on how much Helio customers use Yahoo on their phones. Yahoo is not prevented from making similar deals with Helio's rivals.
Jupiter Research analyst Julie Ask said deals with big-name Web companies would be crucial for Helio if it is to create enough buzz around its brand to attract consumers.
"They can't go out there and be just another voice provider, so they need to be able to get people to use data services," she said. "The easier and more familiar they make the experience for people it's going to contribute to more people using data more often."
Helio's Chief Executive Sky Dayton would not say if he had courted Yahoo rivals such as Google. He said the breadth of content and services found on Yahoo's Web portal was an important factor for the estimated 12 million people his service will target.
"We know from our consumer research that 100 percent of our users use Yahoo on a regular basis, Dayton said.
Aside from the search engine Helio also plans to feature Yahoo news, sports and finance content, as well as its e-mail and instant messaging service.
Helio rents space on the networks of both Sprint Nextel Corp. and Verizon Wireless, a venture of Verizon Communications and Vodafone Group Plc.
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