Lately I’ve been worried about Firefox. Ever since its debut in 2004, the open-source Web browser has won acclaim for its speed, stability, and customizability. It eventually captured nearly a quarter of the market, an astonishing achievement for a project run by a nonprofit foundation. But recently Firefox seemed to go soft.

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Microsoft (MSFT) is about to face a test of whether it can finally put the brakes on its loss of market-share in Web browsers.

The company is expected to release a final version of Internet Explorer 8 this week, a new Web browser that consists mostly of small improvements designed to make surfing the Internet more productive, rather than radical overhauls. For example, a new feature called “accelerators” eliminates extra mouse clicks by letting users highlight text on a Web page and automatically search for the terms on Facebook, eBay (EBAY) and various map Web sites.

Microsoft needs Internet Explorer 8 to reverse or halt its market-share slide. Between February of this year and last year, Internet Explorer lost nearly 7.5 percentage points of browser market-share to competitors, according to Net Applications, a company that monitors the types of browsers people are running when they visit Web sites. IE fell to 67.4 percent of the market in February from 74.9 percent a year earlier, while Mozilla’s Firefox jumped to 21.8 percent from 17.27 percent, and Apple’s (AAPL) Safari rose to eight percent from 5.7 percent, Net Applications estimates.

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Pacific Crest analyst Andy Hargreaves released a note this morning with a bunch of data points showing the rising importance of Apple’s (AAPL) iPhone in Internet usage. And he implies that the current value of the shares could be closer to $184 than the current $176.15 at which the stock trades.

Hargreaves writes that based on data from privately held Internet measurement firm Net Applications, of Viejo, Calif., the Safari Web browser shipped on the iPhone accounts for .3 percent of all world-wide Web surfing in August so far, double its share in June, prior to the introduction of the iPhone 3G. “iPhone’s rapid share gains in Internet usage suggest potential upside to current estimates,” writes Hargreaves, “and are a strong indicator of what we believe are lasting competitive advantages.” He goes on: “As Web-based software and services become more ingrained in our every-day working and personal lives, Apple’s emerging advantage in the mobile Internet will, in our view, become increasingly valuable.”

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This weekend in San Francisco, the second annual iPhoneDevCamp 2 is underway. Whereas the first confab focused primarily on Web applications, this one has a definite native application flavor, thanks in large part to the fact that the iPhone software development kit (SDK) is out of beta and now available for developers.

When the iPhone was released in June, many developers were disappointed by the absence of an SDK for writing third-party applications on day one.

At D5, Steve Jobs explained to Walt Mossberg that Apple (AAPL) first needed to iron out some security issues before they would open up the device to outside developers:

We would like to solve this problem and if you could just be a little more patient with us, we’ll do it.”

–Steve Jobs at D5 on the availability of an iPhone SDK

Fast-forward to the first quarter of 2008, when Apple made good on its promise by releasing an early version of the iPhone SDK. The fruits of the patient developers’ labor was evident at the launch of the iTunes App Store, where 500 free or commercial applications were available to download onto the new iPhone 3G or the original iPhones running iPhone OS 2.0.

No longer were iPhone users confined to using Web applications running in Mobile Safari or resorting to jailbreaking their devices to use third-party programs.

The App Store made it dead simple for every iPhone user to duel their friends with PhoneSaber or satisfy their Dance Dance Revolution/Guitar Hero/Rock Band craving with Tap Tap Revenge, a game which recently celebrated its one millionth download.

At iPhoneDevCamp this year, there’s a greater and more palpable sense of excitement in the air than last year, and it’s reminding me of the time when I was writing applications for another Apple handheld product: the Newton.

While the green device from Apple was not a commercial success–it was surpassed in sales and popularity by the less-capable, yet smaller and more convenient Palm Pilot–the Newton nevertheless pioneered many features we now see perfected in the iPhone.

Fourteen years ago, the Newton could fax, send email and receive pages; the iPhone is a communications powerhouse with 3G/EDGE/Wi-Fi/Bluetooth.

Newton’s handwriting recognition was dramatically improved with Newton OS 2.0 in 1995; the iPhone has fantastic Chinese and Japanese character recognition.

Finally, the Newton promised a day when users everywhere had their own personal digital assistants in their pockets; today, millions of people have chosen their phone to be an iPhone.

Despite leading the Newton protest at Apple Computer in 1998, I admit that Jobs was right to cancel the Newton. He made the correct decision to focus the company’s efforts on Mac OS, and it’s paid off.

The iPhone, after all, is running a version of the same operating system powering today’s Macs. The release of the initial iPhone raised the bar significantly for mobile users tired of using the same-old devices from Palm, Microsoft, and Symbian.

At iPhoneDevCamp 2, the bar is rising even higher for native third-party applications. If you were excited about the first 1,000 apps, wait till you see what comes out this weekend!

Below are photos from Friday’s welcome reception at iPhoneDevCamp 2. For more information, visit the iPhoneDevCamp 2 web site.

iPhoneDevCamp2 Friday Night Photos

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Microsoft unveiled the first beta version of Internet Explorer 8 today, and we’ve been playing with it at PC World. … In this early version, IE 8 is not an upgrade that’s going to bowl you over with amazing new functionality. Microsoft is touting its better compliance with Web standards. (Shouldn’t the world’s dominant browser already be super-compatible with the Web?) It says that IE now recovers from crashes more gracefully. (Wouldn’t it be nicer if it didn’t crash?) A feature called Activities lets developers add functionality to IE in a way that doesn’t seem radically different from things clever sites have done for years with plain ol’ bookmark buttons; Web Slices, which let sites create widgety little snippets of information that you can view by clicking a bookmark button, are kind of interesting–but they’ll only take off if they’re widely supported by major sites, and they’re not radically different from Apple’s Web Clip feature in Safari, which works with all Web pages, not just ones designed to support it.

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