The battle of the browsers

After a few quiet years, the browser wars look likely to return in full force with Google's launch of its new product.

Netscape was the first business to make money on the internet.

Google's high-profile new product has brought attention to the one part of the internet that has received relatively little attention in recent years: the web browser. After a few quiet years, the browser wars look likely to return in full force. The first business to make serious money from the internet was not an online store, adult website or advertising service. It was the web browser, and more specifically Netscape.
The first commercially viable web browser became a billion-dollar payday for its founder Jim Clark, the serial entrepreneur who also made billions after starting the computer graphics firm Silicon Graphics. After its launch, Netscape became the dominant application for web surfing. Despite being given away for free, it was seen as a hugely valuable piece of software by technology investors. As the window through which hundreds of millions of people would view the web, it could become as important as the operating systems produced by Microsoft and Apple, they reasoned.
But not long after the 1995 initial public offering that valued the company at almost US$3 billion (Dh11bn) kick-started the dotcom bubble and made millionaires of many of its early staff, any hope of making big money from selling web browsers was dashed. Microsoft quickly built its own internet Explorer browser and integrated it tightly into the Windows operating system, so tightly that it could not be uninstalled.
Although Microsoft's aggressive move to win the browser war would lead to a decade of court action, regulatory struggles and security flaws - many of the biggest security holes in Windows come from the tight integration of browser and operating system - it succeeded. Within 10 years, Netscape was practically non-existent and the browser market is dominated by free products. The code that powered Netscape is now available under an open-source licence. Most prominently, it is the engine of the free Firefox web browser, the biggest competitor to internet Explorer.
But as the nature of the internet shifts, a new kind of browser war is emerging. The web is no longer just a collection of pages to be viewed on a computer screen. People run software applications in their browser, watch television and manage their social lives. They surf the internet on mobile phones, music players, gaming consoles and TV sets. The boom in low-cost computers - "netbooks" that are built to run little more than a web browser and a handful of support programs - reflects this. Through a single web browser a user can now manage email, listen to music, chat with friends, make phone calls, watch television and prepare a spreadsheet. Why bother with a big, pricey computer running all those other programs?
It is generally accepted that more and more applications and services will be delivered over the internet. Even Microsoft, whose massively profitable operating system business could eventually be cannibalised by web-based platforms, is quickly getting in on the game. "The future is about having a platform in the cloud [online] and delivering applications across PCs, phones, TVs and other devices, at work and in the home," said Steve Ballmer the chief executive of Microsoft, in a recent companywide memo.
Such a shift has opened the doors for a number of new concepts in web browsing to hit the market. The latest, Google's Chrome browser, is built to cope with the increasingly complicated tasks that browsers are expected to perform reliably. Conventional web browsers operate as one program, meaning that a problem with one application on one page can crash the whole browser. Through some clever programming, Chrome isolates each individual process - a YouTube video, an online game, a website loading hundreds of pictures - meaning that when one goes wrong, the rest of your pages stay open.
Because Chrome is based on open-source technology, it is offered free, and much of its own source code is openly available. For Google, investing in building a web browser is not a direct money making venture; the company wants a browser that can run its online applications, like Google Docs, the way it wants them to be run. Douglas Anmuth, an analyst at Lehman Brothers, released a note on the eve of Chrome's launch, suggesting it could quickly snatch market share. "With Firefox having gained approximately 20 per cent market share over the past four years, we believe Google Chrome could gain 15 to 20 per cent share within two years," he said.
Google's entry into the mobile phone operating system market through its open-source Android system could rapidly accelerate the uptake of Chrome, Mr Anmuth said. If Google bundles Chrome into Android phones, it could shift millions of copies of the browser. With high-speed internet now available through most mobile phone networks, web browsing is fast becoming a central part of the mobile phone experience. Apple's iPhone has pushed the mobile phone industry to release a succession of touch-screen mobiles designed for the internet. More than 100 million web browsing phones, about $20bn in total sales, will be sold this year.
This makes the mobile one of the great opportunities for new browsers to grab market share. Apple uses its own Safari browser on the iPhone, and Microsoft pushes a version of internet Explorer through mobiles running its Windows Mobile system. Opera, a Norwegian company, specialises in producing web browsers for mobiles, and more than 30 million copies of its Opera Mobile system will be shipped this year on phones from makers like Sony Ericsson and Motorola.
Despite being free, there are plenty of ways to make money from the large user base that comes with a successful web browser. Although Firefox is given away, its developers, the Mozilla Foundation, earn more than $60 million a year through an agreement with Google. Firefox sets Google as the default search engine for its search box and takes a small share of the advertising revenues from all the searches made by its users. Each search earns just a fraction of a cent, but this adds up quickly with 200 million users.
This revenue model also powers Flock, another new browser based on the free Netscape code. Flock is designed as a "social" web browser, built to capitalise on trends like blogging and social networking. Flock users can share their bookmarks with their friends and "follow" friends as they browse, effectively seeing what they are seeing. A user can send and read email from various web-based mail services without needing to visit the websites and receives live updates whenever a friend updates their profile on social networking sites or posts a new weblog entry. Despite being a giveaway product, Flock raised $15m from venture capital investors in May, bringing its total raised to almost $30m. "We make money the same way most browsers do, through our search widget," said Evan Hamilton, a spokesman at Flock, in response to doubts about the company's business model voiced on the influential technology website TechCrunch. "We have a deal with Yahoo, just like Mozilla has a deal with Google."
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