The Browser Wars: Part 2

Ten years ago, Microsoft's (Nasdaq: MSFT  ) Bill Gates penned his famous memo, "The Internet Tidal Wave." No doubt, it effectively galvanized the troops. The first war was to take the browser. And, in lighting speed, Microsoft crushed Netscape.

But lately, some have argued that the veritable giant has lost its killer instinct, evidenced by a flagging share price. The emergence of upstarts in on-demand computing, like Salesforce.com (NYSE: CRM  ) , and consummate search players Yahoo! (Nasdaq: YHOO  ) and Google (Nasdaq: GOOG  ) , seems to have caught Microsoft offhand. And Google yet again appears to be at it, with the launch of a new browser.

In fact, Google announced a new Firefox affiliate program. You see, Google is putting its muscle behind the Firefox browser. Since its initial release a year ago, there have been roughly 106 million copies downloaded, putting the global market share for the browser at about 9% to 10% (which makes it the second-most popular browser). And as an aside, this has probably been the makings of what might be some rumbling in Redmond, as at very least, Microsoft's dominance in the browser market has been critical to the strength (and yes, dominance) of its Windows operating system and its Office software package.

But the current arrangement also holds some very fairly important ramifications for Google and Firefox (and of course, Microsoft), because those websites that place a button on their sites will be the lucky benefactor of a $1 bounty per Firefox download. Yes, old-fashioned capitalism has a way of working wonders, and this program is likely to mean further erosion in Microsoft's Internet Explorer browser. "The bounty is for Firefox and the Google toolbar," said Peter Hipson, the author of Firefoxand Thunderbird: Beyond Browsing and Email. "So Google sees this as a way to grab more customers. Remember, every search you make, they get something for the advertisements that are included."

According to Hipson, Google and Firefox have had a long-standing relationship. For example, on the front page of the Firefox browser is a Google search box. By way of background, Firefox is a product of the nonprofit organization known as Mozilla (and the original technology came from Netscape). The software is open source, which allows programmers across the world to add cool features. Thus, we have seen new browsers built on the Firefox foundation, also potentially significant because it offers considerable bandwidth for innovation.

But, even if we assume Firefox is better, does this mean it will become mainstream? Not necessarily. According to Eric Lai, the West Coast correspondent at Computerworld, Firefox appears to be much more appealing to tech-savvy and younger users. "For the majority of users," said Lai, "Firefox's new features do not matter enough to stir them out of their inertia. The other issue is that IE 7, coming out in a few months, will close the gap on nearly all the browser features that matter."

As it goes for the ramifications, let's step back and consider the larger picture. Remember, the true cash engine for the Net was and is the search engine, not the browser -- though as mentioned, it contributed strongly to Microsoft's stronghold in its realm. However, this may not be the exclusive source of advantage moving forward, because it seems that a host of other innovations lie in wait.

And to the best of my observation, the new trend is software as a service. That is, you will not download software; rather, you will subscribe to it and start using it straight from your browser. With new technologies like AJAX, the difference in quality between traditional desktop software and Web applications will be almost indistinguishable. Having a sophisticated browser will be necessary for the sophisticated applications. And so the next "browser war" and all its foibles, contingencies, and related benefits and costs may well have begun.

Fool contributor Tom Taulli does not own shares mentioned in this article.


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