The Mozilla Foundation has started a for-profit subsidiary to promote its Firefox Internet browser, the nonprofit group said yesterday, in a move that bolsters its ability to compete with the dominant Microsoft Internet Explorer.

The Firefox browser has emerged as an upstart challenger to Explorer, growing rapidly among tech-savvy Internet users and nibbling into Explorer's market since its official release in November. It has won praise from product reviewers for its security and ease of use.

The newly created subsidiary, called Mozilla Corp., will have 35 employees and will be based in Mountain View, Calif., where the foundation is headquartered. Mitchell Baker, a board member of the Mozilla Foundation, will serve as the corporation's president.

Mozilla Corp. will develop and advertise the Mozilla Firefox browser and Thunderbird e-mail, said Chris Blizzard, a corporation board member. The subsidiary will generate revenue through partnerships with businesses such as Google Inc.

"We do have the revenue to build the development staff to be able to compete better," Blizzard said.

Mozilla released an unofficial version of Firefox for download in June 2004. By the end of April, Mozilla's Firefox had captured 6.8 percent of the Web browser market, according to WebSideStory Inc., a San Diego Web researcher. Internet Explorer's share dropped to 88.9 percent from 95.5 percent in the same period.

Mozilla said yesterday that Firefox's market share currently stands at less than 10 percent. It has generated over 75 million downloads.

But there is a limit to how many customers Firefox can steal from Internet Explorer, said Rob Helm, director of research at Directions on Microsoft, a Kirkland, Wash., organization that tracks Microsoft Corp. Most Internet users who already have Internet Explorer, which comes on computers with Microsoft Windows software, won't bother to download another browser, he said.

"It's amazing how many people have never downloaded a program and installed it," Helm said. "That puts an upper bound on how big Firefox can get."

Still, Firefox will continue to pick off Internet Explorer users who are looking for alternatives, he said. The Web browser is open-source and free for download, meaning that it is easy to access and can be redistributed. It also has additional features, such as a tabbed Web browser, and is not as vulnerable to certain security risks that plague Internet Explorer.

"Firefox is still not very much used and consequently, still not very much attacked," Helm said.

But he said that Firefox is missing a "killer app," or "something that would make people want to go out and install it because they can't get it on any other browser." Almost all Internet applications accessible through Firefox are available to Internet Explorer users.

If anything, Firefox has put Microsoft on guard as it is faced with the prospect of losing market share, Helm said. Microsoft will likely update Internet Explorer more often and add new features already available on Firefox, he said.