Yahoo Allies With Nokia on Maps

Yahoo hopes a new alliance with Nokia will help it regain some of the ground it’s lost to Google and other rivals in the mapping arena.

Through the strategic partnership, Yahoo will exclusively use Nokia’s Navteq platform to deliver maps and navigation experiences to users. It will also integrate those experiences within other Yahoo applications.

Meanwhile, Nokia will bundle Yahoo’s Mail and Messenger products with its devices, rebranding the services “Ovi Mail/Ovi Chat powered by Yahoo!” The co-branded Web utilities will be available the second half of the year, and will be rolled out globally in 2011.

From a business perspective, the arrangement may help Yahoo’s long-term prospects in local mobile advertising, a category that’s expected to explode in coming years. Borrell Associates predicts U.S. mobile ad spending is expected to grow dramatically in the next few years, from $2.7 billion in 2009 to $57 billion in 2014. Analysts believe much of that growth will come from mobile coupons and local search activity.

“The ability to do local performance-based advertising is really on our radar screen,” Yahoo CEO Carol Bartz said during a press conference this morning.

The deal will have special significance for Yahoo’s international ambitions, since Nokia remains the No. 1 seller of mobile phones outside the U.S. (It shipped 432 million devices worldwide in 2009.) Inversely, Nokia hopes aligning with Yahoo will strengthen its position in the U.S. market.

By its own admission, Yahoo has taken its eye off the ball when it comes to mapping and navigation tools. In retrospect, that may have been a serious error since – in the words of Bartz – the combination of mapping services and search is simply “how the world is living now.”

“The two are hand in hand,” she said. “Yahoo lost its focus on maps a couple years ago. We just didn’t put the amount of engineering resources behind it that we did three years ago.”

The companies did not disclose financial terms of the alliance.