Is November 2011 Armageddon For Firefox?

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Mozilla, the non-profit foundation responsible for developing and distributing the Firefox Web browser, released its 2009 annual report on Thursday. The report contained a lot of interesting numbers: 400 million users. 140 million active daily users,.$104 million in revenue.

But the most interesting number was 2011. That’s the year in which Mozilla’s current contract with Google ends.

Most of Mozilla’s revenue comes from search providers paying for placement in the browser’s built-in search pane. According to its audited financial statement (PDF here), about 86% of its royalty revenue in 2009–about $87 million–came from a single search provider whose contract ends in November 2011. And it’s probably not Yahoo, Amazon, or any of the other search providers named in the report.

Elsewhere in the report, Mozilla expresses confidence that “search providers will remain a solid generator of revenue for Mozilla for the foreseeable future,” and notes that Google has already renewed its initial one-year contract twice, most recently in 2008.

But in 2008, Google was just getting its own browser, Chrome, off the ground. It launched in September of that year, and has since gone on to become the number-three browser with nearly 9% market share, passing Apple’s Safari, Opera, and a host of smaller competitors. Next in line is Firefox with 23% share.

Chrome is strategic for Google–it’s the basis of its Web-as-operating-system vision, in which Web applications and browser plug-ins take the place of the traditional desktop OS and applications. It’s the same vision driving the Chrome OS, and it’s got the same target: Microsoft’s twin monopolies of Windows and Office.

So would Google renew its contract with Mozilla after November 2011? That depends on how many search queries, and how much revenue, Google gets from the deal today. If the money outweighs Google’s long-term strategic plans for Chrome, then Firefox is safe.

But as Chrome encroaches on Firefox’s market share, there will come a tipping point where the search deal no longer makes sense for Google.

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