Firefox hits the jackpot with almost billion dollar Google deal

Mozilla's Firefoxes are winning with the new Google deal

Well, Mozilla certainly fooled us. Just when we were counting Firefox out as a major Web browser player in the years ahead. Sure, Mozilla signed a new deal with Google, but by itself though many of us didn’t think the deal meant much. I assumed, along with many others, that Google could support Firefox with its pocket change while devoting all its real attention to its own Web browser: Chrome. Boy, were we wrong!

We now know that Google will pay just under $300 million per year to be Firefox’s default search engine choice. That’s almost three-times as much as Mozilla made in its previous deal with Google. In 2010, 84% of Mozilla’s $123 million in revenue came from its Google search deal.

This is great for Mozilla. As Jay Lyman, senior open-source analyst for 451 Research, said this is “certainly good news for Mozilla and Firefox and it buys them more time to find other sources of revenue beyond Google’s search advertising. However, that has long been and continues to be a challenge. At the same time, Firefox and Mozilla are facing intense competition on all fronts, particularly from Google with Chrome. Mozilla’s wise moves toward mobile computing may be intensified or expedited, but the organization faces significant competitors there too.”

For now though, it’s all good for Mozilla. We don’t know how the details of how Mozilla almost tripled its income were hammered out yet, but we do know that Mozilla played Google off against both Microsoft and Yahoo. While both search giants will still be listed as options for Firefox, the all important default search engine will remain Google.

So why did Google spend this much on a “rival?” We don’t know that either. But, if Google can, with Firefox’s help, push Microsoft’s Internet Explorer out of the top Web browser spot, they wouldn’t cry. What’s more important to Google’s bottom line is that by making sure that Google is the number one choice on two of the big three Web browsers it helps to ensure that Bing and Yahoo stay in a distant second place in the search engine market race.

Which of the big five Web Browsers is the Best? (Review)

Now the question is: What will Mozilla do with its new-found riches? A good guess, to borrow Microsoft’s Steve Ballmer’s favorite phrase, is: “Developers! Developers! Developers!”

In the last three years, Mozilla has ratcheted up its software development spending enormously. The Software Development line in Mozilla’s financials reads:

• 2008: $31.3 million
• 2009: $40.2 million
• 2010: $62.8 million

But where exactly will this money go? Mozilla has declined to answer my queries, but given their recent work, it’s not too hard to guess where their money will go.

First, Mozilla has been pushing out Firefox releases at a dizzying pace. And, as the emergency bug fix release of Firefox 9.01 just showed, sometimes Mozilla has been releasing their flagship Web browser too fast for its users own good. With more resources, Mozilla can, and should, do a better job of quality assurance.

At the same time, Mozilla has recently redesigned its Firefox Web browser for Android. With the rise of smartphones and tablets, it makes perfect sense for Mozilla to spend even more resources on delivering a first rate Web browser performance on Android and Apple’s iOS.

So, what I expect to see is stronger Web browsers on the PC and additional innovation for the growing smartphone and tablet market. I see Mozilla and Google both winning from this deal. For what still amounts to little money for Google, the search giant put more pressure on Microsoft and Mozilla gets more money than the company has ever seen before. Microsoft is the big loser, but Yahoo and all the smaller Web browser companies can’t be happy either.

With $300-million a year in revenue from Google, Firefox is going to stay a major Web browser player. The big loser? Microsoft.