How Firefox Outran the Hounds

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Yet the unit created to oversee the open-source initiative—named the Mozilla Organization after Netscape's emblem, an orange T. rex—got off to anything but a fast start. After AOL bought a battered Netscape in 1999 and later merged with Time Warner (TWX), the tiny project got lost within the giant corporation, where it didn't get the funding and management attention it needed. And there was another issue: The Netscape code was seriously flawed. The browser needed to be rewritten from scratch.

It wasn't until late 2004 that the organization pulled things together and released Firefox 1. By then, AOL had spun out the project as an independent nonprofit entity. The newly created Mozilla Foundation drew seed funding from AOL, IBM (IBM), Sun Microsystems (JAVA), and Lotus Development founder Mitch Kapor. It wasn't until after the foundation created a for-profit subsidiary in mid-2005 that Firefox's market share began to grow at a gallop. Mozilla was freer than the parent organization to enter business relationships that generated revenue"mostly by taking fees from Google (GOOG) and other search engines for embedding their search bars in the Firefox browser.

The Right Product

Oddly enough, Mozilla has Microsoft to thank for some of its success. After it vanquished Netscape, the software giant lost interest in browsers and stopped innovating. That gave Mozilla the opening it needed. "We built the right product at the right time," says Mitchell Baker, chairwoman of the Mozilla Foundation, who has been in charge of Mozilla in its various forms since its early days. "This was partly determination and partly good fortune," she says. "We produced it when IE was terrible and people were happy to have an alternative."

In March, Baker posted on Mozilla's Web site a poignant reflection on the movement's accomplishments during its first decade. She also peered into the future: "In the next 10 years," she wrote, "we'll continue to be radical about building fundamental qualities such as openness, participation, opportunity, choice, and innovation into the basic infrastructure of the Internet itself."

There's no guarantee that Mozilla's future will be as bright as its present. Competition has increased. Over the past two years, Microsoft has beefed up development and dramatically improved Explorer. And Mozilla will have to prove itself all over again in the fast-emerging world of Web browsing on mobile devices—a realm that's expected to dominate Internet usage as wireless networks grow more robust and ubiquitous.

But, for now, Mozilla stands as proof that, given the right set of circumstances and a lot of hard work, David can indeed overcome Goliath.

Hamm is a senior writer for BusinessWeek in New York and author of the Globespotting blog.