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You know, not too long ago Internet Explorer was regarded as dominant force on the web (98% after all), now (at least where I am) it is already on the edge of falling below 50% (last week's numbers are 51.5% of all IE versions combined). And yes Firefox pushed MS to refocus, which gave us IE7 and IE8–so what? Being the dominant force at the moment does not mean you will stay here for long. Unless you have a clear vision ahead. I fail to see any signs of that vision on MS side.

When IE was at 98% they had almost no competition in the marketplace and the Internet was still just catching on. Netscape, through a combination of MS's actions and their own incompetence had become irrelevant. That was never a situation that could endure for long.

I don't disagree with your larger point. In my opinion as a web developer, IE7 and 8 are horrible browsers. My point is that Microsoft is more likely to rebound from this situation than to go out of business or become irrelevant.

And what did MS do? They disbanded the IE team and sat on their asses.

I'm inclined to agree with this assertion, if only for the fact that MS has cycled in and out of browser dominance, historically.

What's interesting to me is that IE4 won for all the wrong reasons, and it looks like IE6 failed for all the right ones. It's real easy to see how MS could massively fail or succeed through their acceptance of standards, but I agree that tho they are teetering now, that doesn't necessarily indicate any future position.

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