Mozilla?s Firefox browser occupies a unique place in the industry. Developed as an alternative to Microsoft?s market-dominating Internet Explorer, Mozilla is the only major Web browser on the planet that isn?t a commercial operation. Firefox aims to answer to actual Web users, rather than cow-tow to corporate goals and pursue every opportunity to capture users and (of course) make profits. And Mozilla has succeeded: the company has been operating for years and steadily eroded Microsoft?s share of the browser market to become Internet Explorer?s leading competitor.
However, just because Mozilla is a non-profit doesn?t mean all that work happens for free. It still has to pay for office space, connectivity, servers, hosting, employee salaries and benefits, plus all the other costs of a software development operation: computers, software, licensing, and (probably) the odd Nerf gun. Mozilla gets support from contributors, but the bulk of the company?s revenue comes from partnerships with search providers, which pay Mozilla the equivalent of referral fees every time someone comes to their search service through a Mozilla browser. Mozilla?s biggest source of revenue is Google, which is set up as the default search on most Firefox installations.
However, Google is also the developer of one of Firefox?s biggest competitors: Chrome. And Mozilla?s search partnership agreement with Google expired in November.
There has not yet been any formal statement from either organization about the agreement?s future, but the situation leaves one to wonder: Can Mozilla survive without Google? And does Google need Mozilla?
Mozilla?s finances
Mozilla isn?t exactly hurting for money. According to the company?s 2010 audited financial statement (PDF) the organization pulled in just over $123 million during 2010, a revenue increase of over 18 percent from 2009. However, of that $123 million in income, more than $121 million came from ?royalties,? which is the category that would encompass partnerships with search-engine companies. That?s more than 98 percent of Mozilla?s annual revenue for the year, meaning its search partnerships are essentially the lifeline of the outfit.
How much of that money was from Google? Mozilla isn?t saying, but some estimates put it around 85 percent, or over $100 million. Mozilla is quick to point out it has search agreements with a number of companies other than Google, including Bing, Yahoo, Amazon, eBay, Yandex, and ?others,? but Mozilla hasn?t broken out royalties received from individual search partnerships since 2008. Back then, its partnership with Google accounted for 88 percent of its royalty income. It?s safe to believe that proportion has changed a bit: Not only has Mozilla expanded out into new partnerships and platforms, but Microsoft?s Bing search engine wasn?t a blip on the horizon back in 2008. Now Bing is roughly even with Yahoo for a distant second place in search market share (and powering Yahoo behind the scenes), has its own partnership with Mozilla. Getting still cozier with Bing, Mozilla just launched Firefox with Bing that makes Bing the default search engine for both Firefox?s search field and so-called ?Awesome Bar.?
However, it?s safe to say that revenue from searches Mozilla brings to Google still accounts for the bulk of Mozilla?s revenue. Although Google?s deal with Mozilla has expired, Firefox downloads still have Google set as the default browser and reports say negotiations between Mozilla and Google are currently underway. It?s probably safe to assume the two will reach some sort of agreement soon.
But can Mozilla survive on a revised search agreement with Google?
Mozilla without Google
Mozilla could get along for a while without a search deal from Google. According to Mozilla?s 2010 tax filings (PDF) the organization had over $27 million in cash and investments and about $3.3 million in expenses; the organization?s consolidated financial statement claims over $105 million in investment assets. Although the situation is complicated, Mozilla could probably coast along for a few years on its existing assets if its search deal with Google were to dry up overnight.
That?s especially true considering Mozilla?s income would not drop to zero if Google went away. Mozilla still has its other search partners (like Yahoo and Bing), and could presumably wring more revenue from them if it offered to make one of them the default search provider for Firefox. And Mozilla hasn?t been letting efforts to solicit contributions slide: It has to receive at least 10 percent of its funding from public support to file as a publicly supported charity. In 2010, that proportion was a healthy 14.71 percent, accounting for $1.3 million from over 5,500 people. That?s a 500 percent increase from 2009, showing Mozilla is getting serious about raising revenue from public support rather than relying exclusively on search partnerships.
But the bottom line is that losing its search deal with Google would cause Mozilla to scramble to find new sources of revenue. The degree to which that would impact Mozilla?s development plans is unclear: The organization claims its software development and fundraising processes are separated. That means programmers wouldn?t be pulled out of code repositories to stand on street corners holding tin cups. But it?s hard to attract (and retain) solid software talent without financing. Over time, revenue shortages would have a negative impact on Mozilla development.
Google without Mozilla
Another way of looking at Mozilla?s situation is to ask: Does Google still need Mozilla? When Google and Mozilla entered into their first search arrangement five years ago, Internet Explorer was by far the market-dominant Web browser, and (of course) has always shipped with Microsoft?s search services set up as the default. Google?s interest in a search deal with Mozilla was to put Google services front and center in Firefox: as Firefox expanded its marketshare, it took Google services along with it.
However, things have changed since five years ago. Internet Explorer is still the world?s most popular browser by marketshare, but Google?s own Chrome is gaining fast: According to Irish tracking firm StatCounter, Chrome has already surpassed Firefox to become the second most-popular browser worldwide. StatCounter has Internet Explorer accounting for 40.63 percent of the global market; Chrome accounts for 25.69 percent and Firefox is at 25.23 percent.
Not all metrics firm agree with StatCounter: Net Applications has Chrome with a 18.18 percent share of the market in November, with Firefox accounting for a 22.14 percent share. However, if current trends hold, Chrome will overtake Firefox in Net Applications? analysis of the market by mid-2012.
Chrome is important in this equation because it ships with Google?s search services configured as the default. Back when Google made its search deal with Mozilla, it couldn?t compete with Internet Explorer with a browser of its own that had Google services set up as a default. Now it can.
Another arrow in Google?s quiver is that it can count on many Firefox users sticking with Google services even if Google were to abandon the search deal with Mozilla. After all, in the last five years Google has significantly expanded the suite of Web services it offers. Very few serious Internet users are completely independent of services like Gmail, Google Docs, YouTube ? heck, a few even use Google Plus. Google also now has years of experience convincing Internet Explorer users to switch away from Microsoft services to Google; it can apply the same techniques to Firefox.
Nonetheless, the worldwide expansion of the Internet means Mozilla is bringing more searchers to Google than ever before, and it?s reasonably certain Google doesn?t want to see those users driven to Bing. Now that Google has the number two (or number three) browser, those searchers from Firefox may not be as valuable to Google as they were five years ago, but they?re almost certainly worth something.
Firefox?s future
Mozilla?s search provider brouhaha has served to highlight the current dilemma of Firefox as a desktop browser. Mozilla has seen some success with its recent rapid-release development cycle, which so far has seen the company roll through Firefox 4, 5, 6, 7, and 8 in 2011 alone. The release strategy has been touted as a way to get major changes to the browser out the door sooner, including performance and memory usage improvements as well as new features like tab groups, location support, the ability to opt out of Web tracking, improved add-on management, and more.
However, users have generally been underwhelmed and confused by the flurry of releases, especially since few bring high-profile new features that seem immediately useful. Instead, Firefox?s release schedule brings many users disruption and annoyance ? and let?s not forget enterprise users who don?t want to be put in a position of having to test and certify new browser releases every six weeks. While Mozilla is trying to move die-hards off old versions of Firefox 3.6 ? the last old-school release ? it also left many people behind who can?t upgrade. For instance, while Firefox will run on Windows XP, it doesn?t run on anything older than Mac OS X 10.5, leaving users of older Macs out in the cold.
Firefox also faces another challenge in that it?s a desktop app? and a lot of the Web browsing world is moving off desktop and notebook computers. Firefox has been working on mobile versions of its browser, but so far it isn?t even a blip on the mobile browsing radar. According to Net Applications, Apple?s Safari browser is over 55 percent of the mobile browsing market, with Opera Mini as its nearest competitor at 20.09 percent and the Android browser coming in with a 16.36 percent share. Firefox and Mozilla browsers total up to less than 0.04 percent. So far, Firefox hasn?t shown any convincing strategy to move forward into the mobile world ? and, ultimately, that may mean fewer people give Firefox much consideration on the desktop.
This article was originally posted on Digital Trends
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Source: http://us.rd.yahoo.com/dailynews/rss/linux/*http%3A//news.yahoo.com/s/digitaltrends/20111206/tc_digitaltrends/mozillasdelicatedancewithgoogle
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