Yahoo! (YHOO) has launched a local search agent for mobile phones. According to Reuters, Yahoo! plans to "take advantage of the inherently local nature of many Web searches performed on phones." Instead of bringing back pages of search links, the new Yahoo! software claims to screen for data that is relevant to the location of the user.

Analysts think that the new search tech, which will be available to run on most US mobile phones with browsers, will help push Yahoo! ahead of Google (GOOG) on the handset platform. "This is not a knock on Google per se, but Yahoo has taken that a very specific starting point — your town or neighborhood," said Gartner analyst Mike McGuire. It is, of course, a big knock on Google. If the Yahoo! product is so much more relevant, the Google competition is not going to be used.

The new Yahoo! product will be run advertising so that the search company can make money on the new product.

The only question left unaddressed is whether people want to use their phones for getting a lot of information that is local and not general in nature. The cell phone is now being flogged as a platform for live and on-demand video, MP3 audio, GPS, VoIP, text messaging, instant messaging, and just plain talking. There are only so many hours in a day and so many minutes on people’s cell plans.

The real issue faced by Yahoo! and any other company that is trying to get mobile users to take advantage of its services is whether consumers are willing to pay for the wireless plans and handsets that will allow them to do all the new, nifty stuff.

Or, do people just want to talk on the phone?

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

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