Several thousand IT professionals gather in Sydney today for Microsoft’s TechEd, the company’s annual love-in for the technically-inclined.

But chances are that they’ll be more interested in Google’s latest release, a new Web Browser called Chrome forever buries the myth of Microsoft as innovator and gives the open source community a lot to worry about too.

The House That Gates Built has long run the line that it should be “free to innovate”. But innovation, in Microsoft-speak, means putting in features that make the computing universe revolve around Windows so that customers have little choice but to buy from Microsoft, not its rivals.

This desire was shown in the first “browser war,” when Microsoft documents show it wanted to “cut off the oxygen supply” to rival Netscape so that it could make its own browser the dominant piece of software with which to surf the Net, then clean up selling the software that makes web pages available to the world.

Netscape succumbed to a combination of this pressure and some dumb decisions of its own.

But a second browser war erupted when the Mozilla Foundation launched Firefox. Mozilla creates software under an ‘open source’ regime, whereby the programming code that comprises software is available for anyone to see and re-use. It also uses technical standards open to all, fuelled by a philosophy that says the more people join a community, the more valuable the community becomes to its members.

Chrome takes a lot of those community-based standards, builds on them and gives away Google’s advances to anyone who wants to have a fiddle under the same open source arrangement Mozilla uses.

Plenty of the work Google has done is a geek’s delight that re-invents the innards of a web browser to make it faster and get around Firefox’s tendency to hog computer memory. A new user interface has the potential to make the web a more pleasant, faster, safer place for everyday surfers.

These new ideas infusing Chrome are light years’ beyond Microsoft’s latest effort, Internet Explorer 8, which is the giant’s first try at doing a browser that actually follows the standards the rest of the computing world adheres to. That effort, ironically, threatens to undo much of the work business has done building applications that can talk to the previous, quirky, non-standard versions of Internet Explorer.

Microsoft is also playing catchup on other fronts. The company has hired Jerry Seinfeld, of all people, to convince the world that Windows Vista is not a dog. It also needs to find a way to its shareholders how the $US5 billion-plus it spends on R&D each year can make a difference to a share price that has been stagnant for most of this millennium.

Had Microsoft actually innovated significantly in that time, these would not be problems. But even its latest efforts like the online file-sharing tool Live Mesh are not as elegant as those created by scrappy start-ups (Sugar Sync cr*ps all over Live Mesh). Now that Google has leapfrogged its efforts with a browser that changes the game, Redmond looks lamer than ever.

Chrome also changes the game for the Mozilla Foundation, source of the Firefox web browser. Firefox is a fine browser that has won plenty of market share for innovating just a little better than Microsoft. But as with much open source software which is written by volunteers because they think it’s a good idea for their desired programs to exist for free, it is a solid imitator with superior plumbing and some nice new touches. Few open source programs, however, represent a quantum leap on the scale of Chrome.

And here’s where things get weird: Mozilla is largely backed by Google, which appears to be picking a fight with its protege, or at least pointing out to the world where the clever innovators really live. That’s a kick in the teeth for open source, as well as a kick in the nether regions for Microsoft and its shareholders.

But Chrome may not be great news for Google, either. The company has floated above petty concerns like browsers, trawling for ad dollars while trying to drag the world into a new age of computing where everything you need lives in “the cloud” somewhere on the Net, instead of relying on a PC to store programs and files. Getting itself down into the muck of a market already wracked by two “wars” is new territory for Google.

And let’s not forget that Chrome is generally applied in a thin layer to make something look shiny. Whatever Google hopes Chrome will achieve, the benefits to Google — and there will be plenty — are probably less obvious than the benefits to users.