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For much of this decade, Mozilla and its Firefox browser were the upstarts, out to beat the big, bad Microsoft and its Internet Explorer browser. Firefox, the descendant of Netscape, the browser that helped jump-start the web revolution, was nimble and it was secure — something Microsoft’s (s msft) IE wasn’t. And it triggered a movement. According to Net Applications, which tracks browser market share, as of the end of May, Mozilla accounted for some 22 percent of the browser market. Microsoft’s IE, by comparison, still holds a roughly 66 percent share. [digg=http://digg.com/tech_news/For_Firefox_a_Challenging_Future_Awaits]

Despite it success, the open-source browser maker finds itself in an all familiar situation: fighting the odds on multiple fronts. Unlike the past when it had to contend just with Microsoft, Mozilla’s competition has grown many fold. Furthermore, the browser battleground has grown much bigger and now also includes mobile devices. Microsoft’s Internet Explorer 8, Apple’s (s aapl) Safari 4.0, Google’s (s goog) Chrome, Opera and Firefox are the five major competitors on the desktop, while WebKit-based browsers are the champions of the mobile world. Last week, when Mozilla announced its new Firefox 3.5 browser software, I decided to reach out to CEO John Lilly for a quick conversation about the state of the browser market. After all, Firefox’s latest browser comes at a time when Google, Apple and Microsoft have all upped the ante in the browser marketplace.

“The world is a lot different from a year ago, and we have three brand new browsers and there is a lot more competition and as a result the users are getting a lot more technology,” said Lilly. But he was not coy about the fact that Firefox has taken over a substantial share of the market, snatching it away from Microsoft’s Internet Explorer. “Having said that, I think it is uncomfortable, because our rivals have 2-3 times the magnitude of people and resources, and they are relentless.” (Techcrunch has a post about recent market share changes, based on statistics from Statscounter.)

It’s quite understandable why everyone is so obsessed with the browser. As guest columnist Rohit Sharma had previously noted, “Today, browsers have lent their structure, chassis and struts to network-connected applications that devour user time and attention away from the browser itself.” But going forward, things are going to be vastly different. To understand the potential, look no further than the iPhone and its many applications. “Many iPhone users may have already forgotten that the rendering engine used underneath them all is a Webkit,” wrote Sharma, “the same underlying layout/display engine used in Safari and Google Chrome as well as Android and Palm Pre webOS.” What that means is that now browser-based network-aware applications can exist on any platform — be it the desktop or the mobile. This makes controlling a browser wildly important for companies such as Google, Microsoft and Apple.

“Super-interactive browser that sits atop a super-fast connection…now interesting things will happen over the next 5-10 years,” remarked Marc Andressen, whose first startup, Netscape Communications, introduced the consumer web to millions by way of its Netscape browser, at a gathering last year.

Lilly is betting on a few things that will keep Firefox ahead of its rivals. First of all, it’s built by a vibrant community of Firefox developers. Secondly, it has garnered the support of folks who develop browser add-ons such as extensions and themes, which allows the browser to adapt to the needs of a diverse user base. Most importantly, Lilly said that Firefox supports the open web, whereas his competitors have their own agendas. “It is premature to put the ‘Mission Accomplished’ banner on the open web,” he said. “Microsoft is still a big player.” Apple, meanwhile, won’t be supporting open video codecs such as Ogg Theora, according to Lilly. Even Google is ambivalent about certain things, though the search giant is “better than” the others, he added.

When I asked Lilly if the emergence of Google Chrome had shifted the focus toward a browser’s speed and performance, he acknowledged that there is competitive pressure and said that as a result, the Mozilla team is looking to “keep the browser fast and slim and still be highly customizable.” So while the version 3.5 of Firefox might be out, Mozilla is working hard on the release of the next version of the browser (3.6), due out either late this year or in 2010. “You should look at what is in Mozilla Labs and see those features making it to the browser,” Lilly said.

Mozilla Weave (which blends web services with the desktop) and Personas, a lightweight theming system are two recent efforts that will likely end up in the next generation of Firefox browsers. Mozilla is excited about Ubiquity, an in-browser command line utility and another new recent effort. JetPack is an API that allows developers to write extensions for Firefox using standard technologies such as HTML, CSS and JavaScript. A common theme that unites these four major areas of push: they allow Mozilla to keep the browser slim and fast, but at the same time make it super customizable. “It is about making the browser faster and increasing its performance,” Lilly said.

When I asked Lilly about Mozilla’s mobile efforts, he said that they were working hard to extend Firefox to the mobile. “It is something the whole company is paying attention to,” he said. He pointed out that a beta version of Firefox for Mobiles (code named Fennec) is available for Nokia-backed (s nok) mobile-focused Linux distribution, Mameo, and that another version is available as second alpha for Windows Mobile.

I don’t think that’s going to be enough, however. Mobile is Mozilla’s Achilles heel — it’s losing mobile platforms to WebKit. As we pointed out earlier, “Today’s browser competition is less about who renders HTML properly, and more about what the incumbent browser is and how well it accommodates whatever new applications the Internet throws its way.” These days, many of these applications are popping up on mobile phones, thanks to the emergence of platforms such as Google’s Android, Palm’s Pre and Apple’s iPhone. These platforms are attracting developers, who will work with WebKit and not Firefox. In other words, Mozilla runs the risk of losing developer interest.

But Mozilla has been here before, with its back to the wall. The good news is that Lilly and his crew realize that and are working on it. Well let’s hope they succeed — for if they do, it will mean consumers get better technology.

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Photo of John Lilly by Joi via Flickr.