Internet Explorer itself isn't a moneymaker for Microsoft, although it can be used to direct consumers to Microsoft's online services. Theoretically, someone who tries out Chrome and likes it better than IE is a potential customer for other Google products, and someone who tries out Safari and likes it may become enamored with Apple.
Because of the move from locally installed applications to the Web, the browser is becoming "the portal into your world," says IDC analyst Al Gillen. "The reason Microsoft wants to fight movement is if you can wrestle the browser away from Microsoft, the more your interface to the rest of the world becomes your browser, and you worry more about what browser you're running than what operating system you're running."
Microsoft's response: Microsoft declined to answer questions about Internet Explorer, but pointed to a blog post by executive Roger Capriotti, who notes that IE9 is gaining popularity among Windows 7 users and business customers.
3. Mobile phones and tablets
Microsoft CEO Steve Ballmer famously laughed at Apple's iPhone in 2007, saying, "It's the most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard, which means it's not a very good email machine. ... We have great Windows Mobile devices in the market today. I look at that and say I like our strategy, I like it a lot. We're selling millions and millions and millions of phones a year. Apple is selling zero phones a year."
Obviously, Ballmer underestimated the iPhone's appeal, at least publicly. Three years later, when Microsoft unveiled Windows Phone 7, company officials admitted they had to start from scratch. After a botched Windows Phone 7 software update broke devices that were already in the hands of consumers, Microsoft's Windows Phone VP Joe Belfiore said Microsoft was still learning how to push out phone updates, a bizarre situation for a company that had been building phone software for years.
Windows Phone 7 has posted strong customer satisfaction ratings, but it doesn't have all that many customers. It turns out Windows Phone Q2 sales dropped from 3 million last year to 1.7 million this year, making the device even less popular than Bada, a smartphone operating system developed on the side by Samsung, which puts most of its mobile efforts into Google's Android.
Things look even worse in the tablet market, which is utterly dominated by Apple's iPad. Windows 7 tablets aren't optimized for touch screens, and Windows 8 won't be out until sometime next year.