Why?

  1. because MozFo probably makes too much revenue for a non-profit organization, and that may become a serious legal problem
  2. because corporations (partners, embeddors, ...) and potential hires prefer dealing with a corporation rather than with a non-profit, they just don't understand/trust non-profit; that's why "Mozilla Corporation" name is perfectly adequate.
  3. because it can trigger new revenue streams
Cons:
  1. taxes, so less revenue immediately for the foundation, but that was not an option, see Why-1 above
  2. potential negative feedback from some fanatics in the community
  3. stricter division of workforce between "mozilla products" that generate revenue, and "mozilla projects" that don't generate revenue, potentially disadvantaging the latter
Protections:
  1. 100% owned by MozFo
  2. no stocks, no shares, no IPO, products remain free, income is 100% shared, boards to control everything
  3. same people, same spirit, same goatsgoals
Open questions AFAIC:
  1. it's not clear at all who's responsible for evangelism. Or even marketing. MozFo or MozCo? MozFo is responsible for promoting blahblah but MozCo has to productize branded tools based on Mozilla
  2. how will third-party tools like Nvu go back to Mozilla? That implies resources for builds for instance. Will MozCo provide the community with support for non-productized-mozilla-based-tools like MozFo did in the past, and with same commitment?
  3. MozFo will probably be rapidly understaffed. What are the hiring plans on both MozFo and MozCo sides?

I think this change was absolutely necessary, and I remember advocating in favor of that change during a chat with Tristan Nitot back in september 2003 when MozFo was only a two months old baby. The rationale behind was already summarizable by the three Why items above.

Let's go further: Mozilla Foundation's international affiliates should probably do the same in order to be able to deal with corporations wishing to support Firefox/Thunderbird local deployment, for instance providing technical support to local companies switching to mozilla products. The resulting revenue stream could ensure the survival of the affiliates without financial perfusion from the Mozilla Foundation, but will probaly push those organizations too close to the edge of their non-profit status. Hence the need for commercial subsidiaries.

Updates: (a) important disclaimer, the 12 points above represent what I understand from this change and where I think this organizational change is helpful. I was not involved at all in the decision or setup of this new organization, and my opinions above should not be seen as representative of MozFo or MozCo in any way. I wrote this article alone, never intended to make something complementary to the official PR or FAQ released by MozFo/MozCo. As usual, I am representing here only myself. (b) Franck Hecker has posted an interesting and long comment to this article.