Microsoft previewed Internet Explorer 9 this morning, which has strong support for HTML5 and makes use of hardware acceleration to dramatically improve the performance of video and animation.

Microsoft executives said that web browsers normally only use about 10% of the power of a computer. “We want to make the other 90% available to web applications so that they have the same performance as native applications,” said a Microsoft representative.

The demos showed very high performance of the latest version of Internet Explorer compared with Firefox and Chrome because of the hardware APIs that make use of graphics co-processors in the system. A Microsoft representative said that this approach can dramatically speed up the web browser performance of low-end netbooks and other systems because the technique makes use of graphics co-processors instead of software based decoding of video and graphics.

Future Firefox and Chrome versions will also be able to make use of the hardware APIs.

What was especially interesting was that Microsoft is trying to provide web applications with the same performance as native applications.

This is exactly the nightmare scenario that Bill Gates, co-founder of Microsoft, feared would happen, that the web browser could substitute for the operating system, and that’s why he aggressively went after Netscape Communications in the 1990s, resulting in an anti-trust conviction against Microsoft.

Although Microsoft is still making use of its Windows operating system combined with IE9, it potentially separates the browser from the underlying platform.

This could enable non-Microsoft operating systems and non-Intel compatible hardware platforms to run high performance web applications at native speeds.

It’s unclear if Microsoft intends to move in that direction but it has certainly opened a Pandora’s Box with its support for graphics hardware accelerated web browsers.

Nathan Brookwood, principal analyst at Insight 64, said that tablet platforms based on ARM microprocessors, making use of graphics hardware accelerated web browsers, could become very competitive with notebook and netbook platforms based on Intel chips.

“Market research firms such as Gartner are still tracking tablet sales along with PCs but this is clearly a different class of computer,” said Mr Brookwood. Apple’s iPad is based on a custom ARM microprocessor.

Intel’s Atom is positioned as a competitor to ARM but it has failed to win any significant customers, and Atom isn’t customizable in the same way as ARM chips. Intel had an agreement with TSMC, the world’s largest chip foundry, to produce custom versions of Atom but it could find no customers, largely because Intel reserved the right to approve customers.

This provision was in place to prevent Nvidia, the world’s largest discrete graphics chip maker and a competitor to Intel in graphics, from using Atom in custom chips. But it also was a deal breaker for other companies.

ARM, based in the UK, has no restrictions on who is allowed to use its designs.

Mr Brookwood said he expects Google to produce a version of ARM optimized for Android operating system smartphones, and tablet computers. In April, Google acquired chip company Agnilux, which is staffed by engineers from PA Semiconductor, a company Apple acquired to build its A4 ARM custom chip used in iPad and in future iPhones.

[Editor’s Note: Tom cross-posted this on Silicon Valley Watcher. –mrh]