The competition of free

Currently the Mozilla Foundation has 12 full time developers and IE has 100. This probably does not include support staff, marketing etc. In the case of Mozilla these numbers are probably small.

All these smart people are chasing the opportunity to dominate a market that is defined by standards, products are rated how well they adhere to standards, and consumers expect the product to be free. Making rough estimates of salaries etc. Microsoft is spending around $15M/yr to compete in a market that brings in no revenue and is a constant public relations problem. Their competition is a not for profit foundation that is releasing products faster and if not better at least comparable to the majority of users.

Solution, Microsoft gives $5M/yr to Mozilla and ships Firefox branded as IE, they pocket $10M and bask in glow of supporting Open Source and the ability to point fingers at someone else for Browser security problems. Consumers win by having the best browser based on standards, trade press looses though as they can no longer write about the "Browser Wars".

Of course there is a small problem of Avalon.....