Bloomberg Article on Firefox

Teen's Firefox Web browser lights fire under Microsoft

Blake Ross, the 19-year-old who created the Firefox Web browser in his parents' house in Miami, has done something big software companies have sought to do for years: capture market share from Microsoft.

In the five months since Firefox was released, the program has snared 5 percent of the market from Microsoft's Internet Explorer, according to San Diego-based research firm Websidestory. Microsoft has dominated the market since surpassing Netscape five years ago.

"I don't think I am Bill Gates' worst nightmare, but this is a serious pride issue for Microsoft," said Ross, a Stanford University sophomore who began work on Firefox two years ago while doing an internship at Netscape.

Firefox, like the Linux operating system, is distributed using a free, open-source model that lets anyone modify the program. The growth of Firefox is a threat to Microsoft because it could be used as the basis for programs that bypass Microsoft's Windows operating system, which generates $11.5 billion in annual sales, said Matt Rosoff, an analyst at Directions on Microsoft in Kirkland, Wash.

Microsoft has responded to the growth of Firefox by speeding up work on the next version of its Internet browser, said Rick Sherlund, Goldman, Sachs & Co.'s software analyst in New York. The new Internet Explorer will have more resistance to viruses and other malicious programs.

About 30 million users have downloaded Firefox, and Ross predicts the software will capture as much as 15 percent of the browser market in the next year.

"Firefox has not just cloned Internet Explorer," said Gary Barnett, an analyst at London-based researcher Ovum. "They have done some cool things and out-innovated Internet Explorer."

Microsoft spends about $10 million and has a few dozen people working on Internet Explorer, said Rosoff. That contrasts with Netscape's prime, when Microsoft was devoting more than $100 million a year and 1,000 workers to Internet Explorer.

"The fact is that they [Microsoft] abandoned the browser market," Ross said. "We heard from customer after customer that the Internet is way too hard to use. People are tired of dealing with pop-up ads and spy-ware. People were tired of the Internet experience, so we wanted to reduce these headaches for them."

Firefox is faster to download than Microsoft's Internet Explorer. Firefox blocks pop-up ads and lets users quickly switch between different Web pages stored as tabs on the top of the screen.

Internet Explorer's U.S. market share fell to less than 90 percent in a February survey by Websidestory, the lowest in three years, down from a high of 97 percent in March 2003. Firefox has 5.7 percent.

Investor concerns about slowing revenue growth, competition with Linux and security flaws have damped gains in Microsoft stock. The company's shares underperformed the Standard & Poor's 500 Index in seven of the past nine quarters. Microsoft has forecast sales to rise as little as 8 percent for the year ending June 30, the slowest growth in company history, down from an average of 38 percent for every year in the 1990s.

Firefox has flaws. Symantec found Firefox had 21 security flaws compared with 13 for Internet Explorer between July 1 and Dec. 31. Internet Explorer had more "high severity vulnerabilities," Symantec said.

When Microsoft first released Internet Explorer in August 1995, Netscape controlled 80 percent of the market. Microsoft hobbled Netscape by requiring that Internet providers feature Internet Explorer instead of Netscape.

Ross got his start at age 14 finding and fixing bugs for Netscape out of his parents' home. By age 17, he was in his second year as a Netscape intern when he began to tinker with the code in the company's Mozilla browser along with co-worker David Hyatt. The effort eventually resulted in Firefox.

Ross next met with directors from the Mozilla Foundation, a new non-profit started by former Netscape employees with the financial backing of Oracle and IBM. Sitting around a picnic table outside Netscape's Mountain View, Calif. headquarters, the group agreed on a plan to back and distribute Firefox.

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