Here’s where we left off in the 1990s: Apple CEO Steve Jobs, then with the word “interim” ahead of his title, conceded that the operating system wars were over and Microsoft was victorious. It doesn’t matter if Microsoft cheated to get there — and I think they did. In the end, Apple was doomed to be no better than second best, and, at that point in time accepted a $150 million dollar investment from Microsoft and a commitment to continue to develop Office for the Mac.

Now some felt, then at least, that Microsoft’s investment somehow rescued Apple from financial ruin, but that was simply not true. It was merely part of a deal where various disputes over patents that had consumed years of legal fights were all brought to successful conclusions.

Oh yes, Apple agreed to make Internet Explorer the default browser on the Mac OS, but we all know how long that lasted. But I’ve already written about the rise of Safari and whether the browser wars have flamed anew. Some of you think they have, actually.

In any case, Apple seemed doomed to niche status, until things changed drastically before Microsoft really noticed.

As Mac development moved at a reasonably rapid pace, Apple’s market share seemed to languish, although profits remained good. However, the arrival of the iPod put Apple in a whole new ballgame. Here’s where Microsoft’s traditional schemes to conquer markets simply didn’t succeed, or maybe they just reacted too late. But Microsoft has always had difficulty succeeding outside of its core market of applications and operating systems.

One day, Apple found itself at the very top of the digital music space, with more customers on the Windows side than on the Mac. iTunes, in fact, recently became the number one music retailer in the U.S., ahead of even Wal-Mart and Amazon.

Microsoft? Well, I think they got themselves pretty much blindsided here, because I don’t think they ever expected Apple to top them in any way. Their efforts to compete, first with various incarnations of their PlaysForSure DRM initiative, and finally with the Zune, were abject failures. Sure, I gather the Zune actually got itself a niche market of a few percent and is holding steady, but imitating a two-year-old iPod really isn’t the way to go.

As far as the iPhone is concerned, well, Microsoft is taking money from Apple to provide ActiveSync technology, which means that this hot-selling gadget will be a full citizen in retrieving Exchange email, calendars and all the rest. I just wonder whether Apple wants to do the same for Macs, or simply compete with various open source tools in Leopard Server.

Microsoft’s advantage, of course, is to sell more of those costly Enterprise server licenses, while the deal gives Apple plenty of credibility in its quest to convert big business from the BlackBerry to the iPhone.

At the same time, Microsoft’s Mac Business still makes plenty of cash selling Office for the Mac. What a strange relationship, though when money is involved, even supposed enemies can find ways to cooperate. The higher the figures, the easier it is to get along.

In the end, though, you wonder how the Mac versus PC wars will continue to play out over time. After all, sales of Macs are going through the roof, and it’s not just because of the arrival of the MacBook Air and the recent updates to the MacBook and MacBook Pro. Even though some of you have criticized Apple for supplying just glossy screens on the latest iMac, they are apparently selling quite well too, thank you. The iMac’s growing success comes at a time when sales of desktop computers are actually tapering off industrywide. So Apple has something good going for them.

While this is happening, what’s Microsoft doing about it? Well, it seems to me their attention is actually elsewhere, as Steve Ballmer continues his great quest to absorb Yahoo and provide real competition to the growing influence of Google.

Now it doesn’t appear to me that Apple has much of an interest in the outcome of the Microsoft and Yahoo skirmish, so long as the end result doesn’t somehow make Macs a poor stepchild in any new online or software products and services.

As to Google, the news about making its App Engine freely available to Web developers has to be causing Microsoft conniptions. Consider how Microsoft spent years pushing its .Net initiative — and, frankly, trying to explain what it is. Just how are they going to be impacted by the latest Google encroachment on their territory?

In the end, while Microsoft plays second fiddle in the great war to become an online powerhouse, Apple can do what it’s doing and get a higher and higher share of the personal computer market. I wonder if Steve Jobs and the rest of Apple’s executive team are hoping Microsoft will continue to focus the lion’s share of attention elsewhere. That could be the best news of all for Apple.

Although I suppose you and I are pretty well connected and all, I am willing to bet that most of you don’t concern yourself about which browser to use. Macs come with Safari, Windows PCs come with Internet Explorer and the vast majority of users of either platform simply use the browser that ships with your computer, without worrying so much about finding a substitute.

Indeed, if you look at those so-called Web stats, which supposedly estimate how much use a browser is getting, the figures will bear this out. Only a minority of you choose something other than what the “mother ship” provides. The same holds true, by the way, for email software.

Yes, we know that Internet Explorer has well-known interface and security lapses that must be fixed on a fairly regular basis. We also know that Firefox has gained a fairly decent percentage of the market, largely because more and more people are absolutely fed up with Microsoft. Even though there is a newer version of Internet Explorer, it seems that Microsoft’s browser share continues to plummet. Of course, you know the old saw about the bigger they are and all the rest.

In the end, though, most browsers, other than Internet Explorer, are probably more similar than different. Look over the basic feature sets of Firefox, Opera and Safari — and a host of derivatives or one-offs — and you will find such common elements as tabs and various ways to organize your bookmarks. If your browser crashes, you can generally reopen the application and reclaim the windows and sites from your last session.

Yes, folks, Safari 3.1 does have that feature, but it’s buried in the History menu. I suppose Apple regards all that as an attempt to revisit your history, so the logic seems to make sense after a fashion.

I suppose, though, that I’m as guilty as anyone when I write about an alleged browser war, where the developers of these applications are vying to reach the mountaintop first. With Internet Explorer losing millions of users every time some sort of survey is published, you can definitely see a trend.

But, with a few exceptions, browsers are free. Why would a company spend big dollars developing software that is being given away? Where’s the sense in that, particularly since there are employees whose salaries and benefits must be paid?

Well, it so happens that, because it’s free to you, it doesn’t mean there’s no source of income. Whenever you use a search engine in Firefox, be it Google, Yahoo or one of the other alternatives, you’ll see clickable banners in the search results. You click, and an advertiser pays the search company, who in turn pays Mozilla, the developer of Firefox and its derivatives. Google sends them tens of millions of dollars each year, which helps to fund their operations.

Now Apple makes a ton of cash from most everything it sells, and iTunes, aside from being a free digital media player application, is also a storefront that houses this country’s number one music retailer. But why give away Safari free to Windows users? Where’s the benefit in that and is Apple just tossing away money to the programmers who do the actual porting of Safari to Windows?

Well, as with Firefox, you have a Google search feature, and you can bet that Google isn’t there just because their CEO sits on Apple’s board. No, the search queries generate cash for Apple and, even at Safari’s present single digit market share on the Windows platform, you can be sure the income is more than sufficient to cover its development costs.

So, from search engine placement alone, it would seem that building browsers can indirectly become a profitable enterprise.

At the same time, does all this make a difference to you? Does it really matter which browser you use, so long as it’s reasonably fast and renders pages with decent accurately?

I suppose not, for the most part, assuming performance is otherwise pretty close in most respects. But there are other reasons why you might want to choose one over the other.

Firefox, for example, comes with a large repository of extensions that allow you to customize the look and feel and add features, such as automatic bookmark synchronization among different computers, which are missing from the core application. Sure, Apple lets you do the same thing in Safari with your .Mac membership, but that’s an extra cost option.

In my travels, though I find that most people don’t really care about any of this. If it works, that’s fine, and today — while using Internet Explorer may be a debatable issue — you can otherwise use any browser on the market and get an excellent online experience. Who needs a browser war?

You know, I’ve written thousands of words expressing my needs and desires for future versions of Mac OS X. Yes indeed, the interface and supporting components are the most important elements of your user experience. You can put the Mac OS on an ugly white box PC and still experience the joys of the Mac. In fact, that’s what happened in the last decade when Apple’s misbegotten cloning program nearly did the company in.

Certainly, with my Mac tower placed below my work desk, I hardly ever give it a second glance, except to change a connection. Working inside is a rarity, since the stock configuration, plus RAM and maybe an extra hard drive, constitutes most of the changes I expect to make during the time I expect to own such a computer.

On the other hand, there are certainly things I’d like to see in Apple’s product lineup that would not just make my working environment more pleasant, but perhaps yours as well. After all, I don’t want to be selfish about all this.

While there isn’t any specific Mac I’m lusting after that isn’t in the present product lineup, I still like to renew my hopes for the “headless iMac,” something that lies between the Mac mini and the Mac Pro; the power of the iMac, but without a display. Add to that mix two extra memory slots, a slot for another internal hard drive, and perhaps putting the graphics chips on a regular PCI card, so you can upgrade if you wish.

While I wouldn’t be the market for this mid-range desktop, I think there would be a huge audience out there for such a model, an audience for whom the Mac mini isn’t powerful enough, the iMac isn’t suited because of the built-in display, and the Mac Pro is just too darn powerful and expensive.

When it comes to the iPhone, I’m not so devoted to the possibility of GPS support that I care all that much whether it happens or not. The existing enhanced Google Maps feature is sufficient for my needs, since I generally print out directions at home first when I’m embarking on a long trip. I actually had a car once with a built-in navigation system, and when I realized I only used it once or twice a year, I decided to be appropriately frugal with my next automative purchase, and I never regretted it.

Support for 3G networking, however, has its attractions. While Web performance is decent with AT&T’s Edge network when signal strength is high, when the number of bars is reduced, it can take a minute or more for even a simple page to render. Welcome to the world of dial-up performance. Since the pundits, led by the estimable Walt Mossberg of The Wall Street Journal, are talking of a June timeframe for the release of a 3G-based iPhone, and AT&T’s leadership has delivered hints of such a thing coming this year, I’ll take that as a yes.

There are, though, other features I’d like to see, and maybe they’ll appear in the forthcoming 2.0 firmware update, which means existing iPhones will have them too. First is the ability to edit simple documents, perhaps courtesy of a touch-based version of Apple’s TextEdit. It would also be nice to be able to select text. One feature the rumor sites are mentioning is the possibility of wireless printing support, so I could output a letter, document or Web page without returning to my traditional Macs. That would be nice if it happens, but I wonder how various printer drivers would be handled with the iPhone interface. Would it require some customization, or can it all be done behind the scenes with the same printing software you use now with Mac OS X?

I can also see where some people, such as our Special Correspondent, David Biedny, would like to see a pro version of the iPhone, perhaps sized the same as Apple’s infamous Newton-derived eMate. This would be a large handheld or extremely tiny note-book that would have a screen two or three times larger than the iPhone. It could still possess a touch screen, but the Bluetooth wireless feature would let you hook up a traditional keyboard and mouse and turn it into a full-fledged computer in the traditional sense.

If that sounds a little underwhelming, do you recall the size of the screens on the first Macs back in the 1980s? Even a tiny bit smaller would be perfectly useful for a variety of purposes. After all, you and I were able to use those compact Macs for writing, desktop publishing, image editing and making music. Yes, the screen might have seemed pathetically small after external displays appeared on the scene, but considering what you can do on an iPhone right now, this eMate successor might be the perfect form factor for a true PC of the future, where size does matter.

While Microsoft struggles to mimic the iPod of two or three years ago, I do foresee the iPod touch getting less expensive over time, as Flash memory prices continue to moderate. Some day, the traditional iPods will lie only at the very bottom of the product line, as Apple extends its Wi-Fi mobile platform to more and more models.

What about a touch-screen note-book or tablet computer? Well, a third party has a tablet mod kit for Apple’s note-books even now, but I don’t think that form factor has proven to be a successful product focus, any more than the full-fledged media center PC. But having a MacBook or MacBook Pro with fully enabled touch-screen, in the fashion of the iPhone, sounds intriguing. Then again, you’d probably want it to have a sturdier screen surface to withstand constant poking and pushing and dragging by fingers of various degrees of scratchiness and cleanliness.

Of course, Apple doesn’t listen to me, but if enough of you want something, they might find a way to produce it. Even now, in fact, some of the ideas mentioned so far, and ones far, far better, are likely already under development behind closed doors in Apple’s development labs.

Let me tell you a true story. On a Monday earlier this year, I went to the local AT&T factory store and bought an 8GB iPhone. Well, the very next day Apple introduced a 16GB version for $100 more.

For a very brief moment, I wondered if I had made a silly mistake. Usually I have managed to time my purchases of Apple products fairly accurately, buying new gear shortly after a new model came out. However, I mistakenly assumed that the next iPhone wouldn’t come out till June, and it would be the version with support for the speedier 3G network.

Yes, I was blindsided by one of Apple’s famous Tuesday morning surprises, but I decided to keep the iPhone anyway. For one thing, I only filled roughly 25% of the unit’s storage capacity after the initial setup. You see, though I have a fairly decent music collection, I haven’t really bothered to rip many of my CDs to iTunes, and I only did that as necessary. My purchases at iTunes have been irregular, so it would be quite some time before I’d come close to filling my iPhone’s capacity.

So I decided to take the fiercely logical approach, and keep the 8GB iPhone. What did I do with the $100 I saved? I invested $69 for AppleCare, which extends the warranty for two full years, and used the balance to take my son out to lunch.

Buy the way, he has the 160GB iPod classic, and, because of its limited capacity, would never even consider getting an iPhone. But why does he always want to use mine for a short period whenever he visits?

Story continued in this week’s Tech Night Owl Newsletter.