Is Microsoft Firefox's last, great hope?

By Preston Gralla

Mozilla has faced considerable criticism for its decision to release a customized version of Firefox in which the default search engine and home page is Microsoft's Bing. But if Mozilla is going to survive, that's exactly what it needs to do, because with declining market share and a potential rift with Google, Microsoft may be Mozilla's last, best hope.

The version of Firefox, called Firefox with Bing is based on Firefox 7.1. Neither Microsoft nor Mozillas is commenting on the financial terms of the deal, but you can be sure that Microsoft is paying Mozilla a pretty penny.

The non-profit Mozilla Foundation receives almost all of its revenue from contracts with search providers --- 98% of all of its revenue in 2010 came that way, according to Computerworld. And most of that money comes from Google. Computerworld says that in 2008, 88% of search provider revenue for Mozilla came from Google.

That heavy reliance on Google represents a serious problem for Mozilla, potentially a near-fatal one. Mozilla's three-year contract with Google expires next month. Given that Google competes against Firefox with its Chrome browser, the renewal of that contract is not a sure thing. And even if it does get renewed, Google will likely play hardball on the financial terms.

Google needs Firefox less than ever before, because Chrome is fast gaining on Firefox, and it's only a matter of time before it becomes the world's number two browser. Back in September, 2010, Firefox's market share was 23.69%, and Chrome's was 8.24% according to Net Applications. By September of 2011, Firefox's market share had dipped to 22.48%, and Chrome's had jumped to 16.2%, says Net Applications.

There are even worse problems for Firefox ahead, having to do with mobile. Google's Chrome-like browser is the default for Android phones, Apple's Safari is the default for iOS devices, and Internet Explorer is the default for Windows Phone 7. Few people bother to download an alternative browser on their mobile devices, which leaves Firefox out in the cold for the next great wave of browser growth.

So where does this leave Firefox? Between the proverbial rock and a hard place. This deal with Microsoft was the right move for Mozilla. It'll likely lead to a solid revenue stream. And it may give Mozilla some leverage in the contract renewal talk with Google. So Mozilla deserves no criticism --- it was only doing what it needs in order to try and keep Firefox a popular browser.

Copyright © 2011 IDG Communications, Inc.

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