The Gnat Nipping At Microsoft

How's this for a mismatch? On one side, you have Microsoft Corp. the
largest software company in the world, with $37 bn in revenues and 57,000
employees. On the other, there's the Mozilla Foundation, a not-for-profit
organization with a $2 mn budget and just 16 employees wedged into a single room
in an office park in Mountain View, Calif. It's Godzilla vs. Mozilla, and
Mozilla is a midget.

Yet the Mozilla Foundation is pulling off a feat that would have seemed
preposterous a year ago: It's taking share from Microsoft in the market for
Internet browsing. According to a survey released on Jan. 12 by Web site
analytics firm WebSideStory, Mozilla's free Firefox browser has grabbed a 4.6%
share over the past six months and seems well on the way to its stated goal of
10%. Meanwhile, Microsoft's Internet Explorer has slipped 4.9 percentage
points, to 90.6%, the lowest in three years. "It's an emotional number.
When Microsoft drops to 90%, it's big news," says Jeffrey W. Lunsford,
chairman of WebSideStory.

Microsoft is hardly on the run. It has an overwhelming lead, and most
corporations have adopted Internet Explorer for their employees-so it should
have staying power. But many of the 16 mn consumers who have switched to Firefox
see the upstart program as safer from viruses and packed with innovations. Those
include a feature called "tabbed browsing" that makes it easier to
move quickly from one Web site to another, in part, by firing up a series of
favorite sites all at once. But Microsoft has been working hard to clamp down on
security and vows to make other improvements. "These features, along with
Microsoft's world-class customer support, continue to make IE a compelling
choice," says a Microsoft spokesman.

Still, analysts say Firefox could have an outsize impact on the future of the
Net. If Mozilla and the other non-Microsoft browser outfits hold their own or
gain share, the 15% of Web sites that aren't completely compatible with
non-Microsoft browsers will come under pressure to design their sites to open
Net standards. That way, Microsoft won't be able to control how content is
presented on the Web. It would also create opportunities for competitors to sell
rival Net software-since Microsoft wouldn't be able to take advantage of the
links between IE and other Microsoft programs.

The Mozilla team isn't stopping with browsers. It has been hard at work on
other kinds of software in recent months. An e-mail program called Thunderbird
was released in mid-December and has since been downloaded by more than 2 mn
consumers. The group has a handful of other programs on the drawing board,
including an electronic calendar called Sunbird and a small browser for use in
cell phones and personal digital assistants, code-named Minimo. These are
expected to be released in 2005 or 2006.

Mozilla's provenance is as improbable as its burst of success. It was born
inside Web pioneer Netscape Communications Corp. in 1998 to harness the budding
open-source software movement. The idea was that volunteer programmers from
around the world would help make improvements to the company's browser. After
America Online bought Netscape in 1999, the organization lost steam. But it was
reborn a year and a half ago as an independent organization funded by AOL, IBM,
Sun Microsystems, and Nokia. Independence seems to have been a tonic:
Development raced ahead for Firefox, a new browser design. It's free, but
Mozilla asks users to make tax-deductible donations to support development
efforts.

Without a remarkable guerrilla marketing campaign, Firefox adoption might not
have leapt ahead so rapidly. The campaign, called SpreadFirefox, is orchestrated
by a handful of Mozilla fans and carried out by 58,000 volunteers. The campaign
has tapped into Web logs, or blogs, to generate buzz. It not only set up its own
blog (www.spreadfirefox.com) to coordinate activities but also hooks up with
others to expand its reach. If a blogger says nice things about Firefox, for
example, it's rewarded with links to its site. The guerrilla campaign "is
fanning the flames," says analyst Stacey Quandt of researcher Robert
Frances Group.

All of this has been a pinch-yourself experience for Mozilla's Baker. A
former Netscaper, she became accustomed to laboring in obscurity in the Mozilla
project's early days. Now she's struggling with the group's recognition.
She gets buttonholed by parents at her son's school and approached by
strangers at exercise class. Recently, after Baker handed a Mozilla T-shirt to a
friend at Trapeze Arts, the circus-skills gym where she works out, a nearby
woman burst out: "Are you from Mozilla? Firefox changed my life!" She
then kneeled and bowed before a stunned Baker.

These may be heady times for the Mozilla crew, but they know not to take
their sudden success for granted. They remember how Netscape was crushed by the
Microsoft juggernaut. This game is different, though. Mozilla has the vast and
vibrant open-source movement on its side. This time, Godzilla may not dominate
the way it has in the past.

By Steve Hamm in New York in BusinessWeek. Copyright 2005 by The
McGrraw-Hill Companies, Inc