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

The Bottom Line – If, 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.

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