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Macquarie (USA)
Equities Research
The Equities Research Specialist
U.S. Internet

United States

The Browser Wars Part Deux; Google Chrome Browser for iOS is Coming

Event

  • With a Google browser for iOS coming, we examine its potential impact on GOOG and historical parallels to the last browser war.

Impact

The Bottom LineIf, as we assume, GOOG successfully introduces its Chrome browser for iOS devices, it could significantly benefit Google’s strategic and operational mobile positioning. Six key points:

1)   GOOG to launch its Chrome browser for iOS devices – the timing is unclear, but it could be as soon as Q2 and is very likely to be a 2012 event.

2)   Could help limit TAC paid to Apple – if GOOG gains market share, it could reduce our estimate for Google.com TAC meaningfully.

3)   Replay of Browser Wars; This Time Its Mobile – there are many parallels to the Browser Wars of the late 1990s.

4)   Chrome browser for PCs has been a home run – helping to reduce desktop TAC significantly.

5)   Expect a significant marketing campaign – GOOG’s advertising and promotional budget grew 118% and 100% y/y in 2010 and 2011 to $772mm and $1,544mm, respectively, in support of the desktop; expect a similar playbook for mobile.

6)   Early reviews of Chrome Browser for Android are positive – Google has been able to differentiate as they did with Chrome for desktop.

Outlook

  • Affirm Outperform rating on GOOG.

Analyst(s)
Macquarie Capital (USA) Inc.
Ben Schachter
+1 212 231 0644
ben.schachter@macquarie.com

Tom White
+1 212 231 0643
tom.white@macquarie.com

John Merrick
+1 212 231 6598
john.merrick@macquarie.com

15 May 2012

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