Why Yahoo! should invest in Mozilla
Over the past few months, Yahoo! Inc. (NASDAQ:YHOO) has been on a shopping spree, adding many mobile-based startups to its ecosystem. Yahoo! recently added social blogging site Tumblr to compete against Facebook Inc (NASDAQ:FB) and Google, and is currently bidding for video streaming site Hulu. This is all part of CEO Marissa Mayer’s grand plan to unify Yahoo! into a cohesive ecosystem, which is its primary weakness versus Google Inc (NASDAQ:GOOG). While Google is able to tie together all of its services neatly through its mobile operating system, web browser and cloud-based apps, Yahoo!’s island of misfit toys still lacks unity, despite the recent release of an enhanced mobile app.
Yahoo! Inc. (NASDAQ:YHOO) has also tried to team up with Apple, but that partnership only guarantees a few upcoming Yahoo! apps for iOS. Both Apple Inc. (NASDAQ:AAPL) and Yahoo! are aligned with too many other conflicting parties for that partnership to grow into anything more. Apple Inc. (NASDAQ:AAPL) still has a contract with Google to use its search engine for default iOS text searches, and Yahoo! is tied to Microsoft Corporation (NASDAQ:MSFT) for its search results, thus shattering the dreams of a unified Apple-Yahoo! operating system.
To solve these problems, I believe that Yahoo! Inc. (NASDAQ:YHOO) should invest heavily in or acquire a majority stake in Mozilla, which is valued between $2 billion to $4 billion. Yahoo! could then make the Firefox browser its own, integrating the same sign-in system that Google Inc (NASDAQ:GOOG) Chrome uses to synchronize its bookmarks and ecosystem across multiple devices. Yahoo! could develop its own HTML5 app store, which could feature apps that could be used both in the desktop browser and on mobile Firefox OS devices. Yahoo’s mobile ad revenue would rise substantially. In short, Firefox could become the mobile operating system Yahoo! Inc. (NASDAQ:YHOO) needs to stay on even footing against Google Android.
With Yahoo! Inc. (NASDAQ:YHOO)’s investment, Mozilla could also grow at a much faster rate. It would have more capital to market its products, attract developers, and build its brand. Since Microsoft Corporation (NASDAQ:MSFT) would indirectly benefit from the deal, then lower-end Nokia Firefox phones, which could complement its Windows Phones, could also become a possibility. Therefore, I wouldn’t be surprised if Mozilla’s unexpected entrance into the mobile market suddenly changes the game for the major mobile players.
The Foolish Bottom Line
It might be easy to dismiss Firefox OS as another ill-advised attempt to stake a claim to the fragmented mobile market. However, unlike other recent challengers to the mobile market, Firefox’s web browsers have a large following, which could provide it with a foundation to build its mobile ecosystem on. If Mozilla plays its cards right and makes the most of its alliance with Yahoo, then it could grow its user base very quickly. Therefore, investors should keep an eye out for Firefox OS phones, which are due out in international markets this year, and will arrive in North America by 2014.
Leo Sun owns shares of Apple Inc. (NASDAQ:AAPL). The Motley Fool recommends Apple and Google Inc (NASDAQ:GOOG). The Motley Fool owns shares of Apple, Google, and Microsoft Corporation (NASDAQ:MSFT).
The article Will Firefox OS Set the Mobile World on Fire? originally appeared on Fool.com.
Leo is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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