Joel on Software writes about IE's lack of development and the good position this puts Mozilla Firebird in:
Now with a good code base to build upon, Firebird is likely to soar past IE in functionality and performance. With some real competition, perhaps Microsoft will again have an incentive to make improvements of their own.
They likely wont make improvements until Longhorn (as they have said), which is a double edged sword. On the good side, it gives Firebird and other browsers room to grow and get far ahead of IE. On the other hand, it will be hard to get these browsers into the awareness of the general windows using public. IE has nowhere to go but down from here.