Browser Wars: The Monkey On Microsoft’s Back

Forbes: Browser Wars: The Monkey On Microsoft's Back

Poor Microsoft. This week, the Redmond, Wash., giant is gearing up for the next big release of its Web browser, a leap from Internet Explorer 7 to IE 8. When open-source competitor Mozilla released its last update of Firefox in June, the Web went wild: People downloaded more than 8 million copies in 24 hours.

Microsoft's (nasdaq: MSFT – news – people ) release might not have such a frat party feel. Even as it gears up to release IE 8, the developers behind the Firefox Web browser are experimenting with a new technology that sharpens the threat their browser software poses to Microsoft's most valuable businesses. The new technology, dubbed TraceMonkey, promises to speed up Firefox's ability to deliver complex applications.

The move heightens the threat posed by a nascent group of online alternatives to Microsoft's most profitable software: PC applications, like Microsoft Office, that allow Microsoft to burn hundreds of millions of dollars on efforts to seize control of the online world. Microsoft's Business Division, which gets 90% of its revenues from sales of Microsoft Office, spat out $12.4 billion in operating income for the fiscal year ending June 30.

Google (nasdaq: GOOG – news – people ), however, is playing a parallel game, using profits from its online advertising business to fund alternatives to Microsoft's desktop offerings. Google already says it has "millions" of users for its free, Web-based alternative to desktop staples, including Microsoft's Word, Excel and PowerPoint software.

The next version of Firefox, which could debut by the end of this year, promises to speed up such applications, thanks to a new technology built into the developer's version of the software last week. …