Why IE Will Lose Market Share in 2010

There was a time when Microsoft ruled the Web, when its Internet Explorer (IE) browser enjoyed a supremacy only exceeded by its Windows operating system.

That was no coincidence, of course: IE has been bundled with Windows since 1995.

But the days of IE owning a 95% share of the browser market are long gone, assaulted first by the appearance, and then success, of Mozilla's open-source Firefox, followed by a resurgence of Apple's Safari on the back of gains in Mac share, the efforts of a small Norwegian developer, and the entry last year by Google into the fray.

Now IE seems to be on the ropes. In the last five years, it's lost nearly a third of its market share as the once-dead browser space has been reinvigorated with faster, smaller and more flexible rivals.

It looks like the trend will be tough, very tough for Microsoft to turn around.

How tough? Computerworld asked a pair of browser experts, including an executive from Net Applications, the California-based Web metrics company most often cited for browser standings, to explain why IE will lose even more ground in 2010.

That's what the numbers say. The erosion in IE's share of the browser usage pie shows no sign of abating, and in fact is accelerating, according to data from Net Applications.

IE lost 7.8 percentage points during 2009, ending the year at a new low of 62.7%, an annual loss rate of about 11%. In 2008, IE lost 8.3 points, for an annual loss rate of 10.5%. That's a pretty clear trend line.

More troubling for Microsoft is evidence of a quickening in IE's decline. IE lost an average of 0.94 of a percentage point in each of the last six months of 2009, nearly triple the 0.36 of a point average decline during the first six months. (The difference in 2008 between first half and second half was less dramatic: IE lost an average of 0.6 percentage point each of the first six months of 2008, dropped 0.8 point each of the six months in the second half of the year.)

In fact, if the loss rate of the last three months of 2009 continues -- IE fell by more than 3 points from October through December -- IE will become a minority browser about a year from now, sometime in January 2011.

The EU makes Microsoft go to the polls. After a year-long battle, antitrust regulators in the European Union last month approved a deal with Microsoft that requires the company to add a browser ballot screen to Windows. The ballot, which appears on any PC that has IE set as the default browser, lets users pick one or more rival browsers to download and install.

The ballot screen will add to IE's troubles, argued Sheri McLeish, an analyst with Forrester Research. "Certainly another reason [for IE's continued decline] that you can point to is the EU's browser menu," said McLeish.

Vince Vizzaccaro, executive vice president with Net Applications, agreed that the ballot's potential for change was real, but was less sure that IE would be affected. "This was a long, drawn out battle with extremely high stakes," he said. "What this means to future browser usage market share in Europe is unknown now, but the bet here is it will be significantly different than it would have been otherwise."

The browser ballot screen will begin appearing on European users' desktops in mid-March.

Chrome's a threat. In the 16 months since Google launched Chrome, the browser has captured an impressive 4.6% share, according to Net Applications' newest data, and in the process has grabbed the No. 3 spot from Apple's Safari.

In fact, Chrome boosted its usage share last year more than any other browser. In the stretch from December 2008 to December 2009, Chrome's share grew by 3.2 percentage points, more than the second-place Firefox, which increased its share by 2.9 points.

Although it's unclear which rival has been most affected by Chrome's hard charge, both McLeish and Vizzaccaro said that Google was one factor in IE's slide. "Given the inroads Firefox has been making in the past few years, the maturation of Chrome, and uptake [of] Safari, Microsoft will be hard pressed not to lose market share, particularly on the consumer side," said McLeish.

Vizzaccaro noted that Google only flexed its marketing muscle late in 2009, and assuming it continues to do so, will likely grab even more share this year. "Chrome showed up in ads on Google's search page, which almost never happens," he said. "[And] Google also announced the ongoing development of Chrome OS to up the battle with Microsoft and Apple."

Chrome OS , which won't appear on netbooks until later this year, is based on the Chrome browser; any gains Google's operating system makes this year will be accompanied by increases in Chrome's share.

IE8's fails to hold on to Microsoft's users. Microsoft may have sat on its haunches, and its laurels, for far too long, long enough to let Firefox and Chrome and Safari and Opera make inroads on IE's once-mighty share, but it told users throughout 2008 and early 2009 that Internet Explorer 8 (IE8) would change all that.

It didn't work out that way.

Although IE8 is now the most-used version of Internet Explorer, its growth hasn't offset the contraction of IE6 and IE7, says Net Applications' numbers.

Last year, IE8 increased its share by 20 percentage points, but in the same period, IE6 lost 13 points and IE7 dropped 20 points. Net loss to Microsoft: 13 percentage points.

In other words, although Microsoft's made headway in its campaign to convince people to abandon IE6 and IE7 for the more modern IE8, it's shedding users along the way.

McLeish put forward one theory to explain the situation. "We should see more migrations to IE8 as people upgrade to Windows 7, but in businesses there's still a reliance on IE6 because of legacy apps that only work in IE6," she said. "In these instances an alternative to IE like Firefox may be more attractive because they can run at the same time, whereas IE6 and IE8 cannot coexist."

Mobile browsing IE has never played much of a role in the mobile space -- Opera Mini is the leading browser on phones -- and with a recent jump in mobile browsing, it looks like Microsoft will be left even further behind.

"Mobile browsing usage share exploded in December 2009," said Vizzaccaro, who added that during the month, mobile devices accounted for 1.3% of all those that were used to surf the Web.

Although mobile hardware accounted for a relatively small share, with their individual shares even smaller -- the iPhone, for instance, had only a 0.44% share, phones powered by Google's Android an almost infinitesimal 0.02% -- month-over-month increases were dramatic. Android phones, for example, increased their share by nearly 56% between November and December, while RIM and the iPhone boosted theirs by 22% and 20%, respectively.

Windows Mobile -- Net Applications tracks it as Windows CE -- meanwhile, stayed flat from November to December, at 0.05%. With zero mobile momentum, IE's won't be able to take advantage of what looks to be a banner year for mobile browsing.

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