For a market segment Microsoft was said to have won decisively in the mid-1990s, the company spent a lot of time in 2004 putting out fires on the browser front.

Like the ghost of the Netscape browser rising to haunt its slayer, Firefox emerged with a vengeance from the Mozilla open-source group, which was founded by Netscape in 1998 and last year spun off by parent company Time Warner. Firefox started off the year a prerelease, name-challenged project by a group that had lost much of its credibility after chronic delays and significant setbacks.

But Firefox ended 2004 as a force to be reckoned with. While IE went much of the year with a lock on better than 90 percent of the browser market, surveys showed it slipping incrementally through the second half. By November, one survey showed that Firefox had forced the dominant browser below the 90 percent mark for the first time since the browser wars of the last decade.

In the meantime, Mozilla made progress on other fronts, including a Nokia-funded project to produce a version of Firefox for cell phones and other small devices; a new effort to create an alternative to Microsoft's ActiveX plug-in technology; and an alliance with the Gnome desktop software project to improve the browser-desktop integration in advance of Microsoft's much-delayed Longhorn operating system, in which browser and desktop will be significantly more blended together.

As for Netscape, America Online spent the year proving to the world that its storied browser is not dead yet. In the spring, the company started hiring with an eye to revitalize the Netscape division, and in the fall--as the Netscape browser celebrated its 10th anniversary--word got out that AOL was preparing not only a standalone browser based on Internet Explorer but a new Firefox-based browser that can also run on IE; a redesigned portal site; and an accompanying marketing campaign for the storied, bloodied brand.

The catalyst for the Firefox explosion was the havoc wrought on the Internet by phishing schemes, spyware and other security menaces. In response to complaints about IE's security, Microsoft in August issued an operating system update, Service Pack 2, that significantly changed the way the browser handled pop-up windows, Web site plug-ins like Macromedia's Flash application, and software downloads.

The browsing changes incensed some Web application developers, who predicted hard times for plug-in vendors. It also raised questions about Microsoft's decision to issue the browser changes through an operating system update only, which would require about half the people running Windows to pay for an upgrade to Windows XP.

Microsoft battled more plug-in headaches with the continuation of its defense against the University of California and its Eolas spinoff, which in 2003 won a landmark $521 million patent infringement judgment--later upped to $565 million--against the software giant for IE's plug-in mechanism.

In the spring, Microsoft won a significant round against UC when the U.S. Patent and Trademark Office initiated its own re-examination of the patent. And based on the composition of the federal appeals court panel that convened in December to hear Microsoft's appeal, legal eagles gave the company good chances of having at least part of the judgment overturned.

--Paul Festa