November 20th, 2009
Mozilla: Still too dependent on Google for revenue; Can it diversify?
Mozilla reported its 2008 audited financials and the organization behind the Firefox browser delivered consolidated revenue of $78.6 million, up 5 percent from 2007. And the revenue picture looks even better if you exclude the $7.8 million loss in Mozilla’s investment portfolio. The worry: Google, now a competitor, is still bankrolling Mozilla.
Mitchell Baker, chairman of the Mozilla Foundation, outlined the financial picture on her blog. There’s a lot of good stuff in there.
To wit:
- Mozilla funds 200 people working full or part-time on Mozilla.
- The company has outposts across the globe and Firefox comes in 70 languages.
- Mozilla is launching messaging software.
- And Firefox has 110 million daily users as of November.
The worry for me as a Mozilla fan: The foundation’s financial stability depends on Google. Baker noted that Mozilla is diversifying its revenue base somewhat, but not enough in my view. She notes on her blog the majority of Mozilla’s revenue “is generated from the search functionality in Mozilla Firefox from organizations such as Google, Yahoo, Amazon, eBay, and others.”
A trip to the actual audited PDF of Mozilla’s financial results and a note on “concentrations of risk” reveals:
Mozilla has a contract with a search engine provider for royalties which expires in November 2011. The contract was recently amended and extended to November 2011. Approximately 91% and 94% of Mozilla’s revenue for 2008 and 2007, respectively, was derived from this contract. The receivable from this search engine provider represented 80% and 86% of the December 31, 2008 and 207 outstanding receivables, respectively.
Obviously that search provider is Google. Simply put, Mozilla needs to diversify that revenue base from Google, which funds the foundation, but is increasingly a competitor. Having a rival fund your operations isn’t comfortable for any organization. Mozilla’s current situation is like Oracle accounting for the bulk SAP’s revenue. Or Microsoft providing most of Red Hat’s revenue. Or MySpace accounting for the majority of Facebook revenue. You get the idea.
Baker notes in her blog:
The past few years have seen an explosion of innovation and competition in web browsers, demonstrating their critical importance to the Internet experience and marking the success of our mission. In 2008 not only did Microsoft and Apple continue developing their web browsing products, but Google announced and released a web browser of its own. Competition, while uncomfortable, has benefited Mozilla, pushing us to work harder. Mozilla and Firefox continue to prosper, and to reflect our core values. We expect these competitive trends to continue, benefiting the entire Web.
Can Mozilla realistically diversify its revenue base away from Google? That’s unclear on many fronts. Google has the dominant market share in search. Yahoo is a non-factor. And Microsoft has the Bing search engine, but isn’t likely to support Firefox, a browser that competes (and often wins) against the software giant’s Internet Explorer.
Given that landscape Mozilla needs to get creative about that lucrative search box. Of Mozilla’s revenue generating partners only Amazon and eBay have the heft to really help diversify the foundation away from Google. Instead of a search box, perhaps Firefox needs a commerce box that would allow eBay and Amazon to pick up some of the revenue slack.
How do you think Mozilla can diversify away from Google?
Larry Dignan is Editor in Chief of ZDNet and Smart Planet as well as Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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