It's tacky to say I told you so. But it now seems as if our previous predictions that IE9 cannot achieve enough market share to defend Internet Explorer's overall market leadership were spot-on. One week into the automatic IE9 update process, IE9's market share remains insignificant.

According to StatCounter, IE9 stands at a 2.89% market share (more than five weeks after launch), up from about 2.41% one week ago. This week's gains are mainly due to the activation ofIE9 on the Windows Update Channel that pushes the browser as an update to Windows 7 and Windows Vista (SP2) users. It appears that our forecast that IE9 would quickly gain market share among Windows 7 users was too optimistic. StatCounter currently indicates that Windows 7 has a 32.59% global market share: If we assume that the majority of IE9 installations take place on Windows 7 systems, then IE9 has a market share -- in a best-case scenario -- of about 7.4% on Windows 7 systems. Given the marketing behind IE9, that seems to be a bit low.

In comparison, Firefox 4 is quickly gaining traction and has surpassed IE7 over the past few days. Although it was slightly behind IE7 one week ago, Mozilla's browser is now almost 1.7 points ahead and estimated at an 8.25% market share (after one month of availability). Mozilla has an automated update mechanism that tells users there's a new browser available, but Mozilla doesn't have the power and reach of Microsoft's (Nasdaq: MSFT) Windows Update system. Mozilla announced that it will launch more campaigns to market and promote Firefox 4 within the coming weeks and that we should see market adoption of Firefox 4 quickly approach that of Firefox 3.6, which is right now at 18.34%, according to StatCounter.

IE9 is not performing as well as IE8 did two years ago. One month after launch, IE8 had captured a 3.74% market share -- without extensive marketing campaigns that supported IE9. IE8 was launched without any big announcements, and I have to admit that I even missed the launch day back in March 2009.

IE8 gained market share over the following two years and topped out somewhere in the range of 30% to 35%, depending on which Internet analysis firm you believe. StatCounter currently estimates IE8's share at 30.03%, which is about flat from last month. It's rather unlikely that IE9 can grow as much as IE8 did, as the browser is limited to Windows 7 and Windows Vista SP2. Compared to two years ago, IE is also dealing with much more aggressive competition, as Google (Nasdaq: GOOG) actively pursues an opportunity to capture market share from IE. It would surprise us if IE9 would end up with more than 25% of the browser market in the long run. It may even be tough to hit 20%, since we know that IE10 is already under development and possibly targeted for a March 2012 release.

This failure could have dramatic impact on Microsoft, as IE9 needs to limit Chrome's market share on one hand and build a foundation for Microsoft's cloud services on the other. Chrome is critical for Google to lock users into using the company's search engine to generate advertising revenues (and keep those users from using Microsoft's Bing, as well as Yahoo! Search).

IE9 may not be enough for that job, and it may not be enough to build a user base to support the coming app store in Windows 8 and services such as Office 365, which would require a large number of IE9 users to increase Microsoft's chances for success. If Google can push Chrome to more and more users, it will be able to push proprietary services such as its SPDY technology and make the case for its cloud services, while binding users to its advertising engine.

Microsoft cannot afford to lose this battle. However, the company is in a tough spot right now. It's time to bring out the big guns, Steve.

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