Google (NASDAQ: GOOG), while generating most of its revenues through its search platform, has been attempting to diversify its business into many segments. Of these products, the Chrome browser, which was first released in 2008, is important in its strategy to create a differentiated internet experience for its users. As with the Android platform, Chrome’s success will give the company a large user base which can be used to drive search revenue growth going forward. In the browser space, Google’s (NASDAQ: GOOG) Chrome primarily competes with Mozilla’s Firefox, Microsoft’s (NASDAQ: MSFT) Internet Explorer and Apple’s (NASDAQ: AAPL) Safari. See our complete analysis of GOOG here According to Net Market Share, Google Chrome has been steadily increasing its market share among browsers. It has now captured approximately 19% of the browser market, up from 16% in September 2011. Increasing user adoption is probably due to the browsers many differentiating features, the most important of which are an address bar which doubles as a search bar, and the ability of a user to sign into the browser itself. These features help increase Google’s revenues by (1) positively influencing Google’s search market share, and (2) helping the company drive better (and more lucrative) ad targeting. 1) Google’s search market share is higher on Chrome than other competing browsers We currently estimate that Google’s PC search market share for all browsers is approximately 67%, and expect this share to rise to around 70% by the end of our forecast period. On the other hand, Google’s market share for searches conducted on its Chrome browser stands at approximately 95%.  This large discrepancy in search market share, depending on which browser is used, is one of the reasons why we think that the Chrome browser has helped increase Google’s revenues. Due to the disproportionately high search market share on Chrome, we think that if the company is successful in attracting more users to the browser, we will likely see an upside to Google’s PC search market share estimates.
2) User can sign in directly to the Chrome browser, which can allow Google to provide more targeted search ads As mentioned earlier, one differentiating factor for Chrome is that a user is able to sign in directly to the Chrome browser by using their Google account. This feature allows as a signed in user to import their profile (which includes browsing history, extensions etc.) to a browsing session even if they are using a different computer. We think that importing a profile provides a user with an incentive to sign in since it will provide them with a similar browsing experience regardless of where they are. If a user is signed in to Chrome, Google will be able to use their data to provide more targeted advertisements on its search and display platforms. If advertisers are willing to pay more for such targeted ads, we could see upside to Trefis’ revenue per search estimates for Google.
We currently have a $661 price estimate for Google, which is approximately the same as the current market price.Notes: