The key to control of Egypt is the military, and for now, they're backing Mubarak.

Western diplomats and American officials say that Egypt’s top military commanders, including both the defense minister and the chairman of the armed forces, have told them for weeks that the Egyptian army would never use force against civilians to preserve the regime. Some depicted Mr. Mubarak’s speech as a sign that his power had effectively waned.

“The government of Egypt says absolutely, it is done, it is over,” a Western diplomat said, but “that is not what anybody heard,” in part because Mr. Mubarak’s delegation of power to his vice president did not seem to be irrevocable. But the developments nonetheless reopened the question of who wielded ultimate power in Egypt after the military’s growing intervention.

The military statement, broadcast first by a civilian announcer on state television and then by a uniformed military spokesman, came as the city — and many other places in Egypt — began noon prayers on Friday, the Muslim holy day and the beginning of the weekend, a moment that has been the prelude for large-scale demonstrations since the revolt started.

Several hundred protesters gathered outside the presidential palace in the suburb of Heliopolis, news reports said, but troops backed by armored vehicles and razor wire barricades did nothing to prevent them from assembling.

In the upscale neighborhood of Mohandiseen, about a thousand protesters spilled out of the Mustafa Mahmoud mosque to march on the Radio and Television Building, even though shouting matches broke out as some Egyptians watching them urged them to call off their protest since Mr. Mubarak repeated that he would leave in September when elections are scheduled. But one demonstrator, Mohamed Salwy, 44, said: “Mubarak doesn’t understand. I think these protests are going to have to go on for a long time.”

Once they arrived at the broadcasting center, they were joined by thousands of others, facing a ring of steel made up of a dozen armored personnel carriers and tanks forming a cordon.

Outside the capital, television images showed large numbers of protesters gathering under a sea of Egyptian flags in Alexandria. 
Two things:  so far the military isn't going after the protesters, and the protesters are expanding their protests well outside Tarhir Square in Cairo.  Things are getting very tricky now.  If the protesters manage to actually shut down the Suez Canal, for instance, then all bets are off.  On the other hand, it's possible Mubarak could bug out at any time if the military decides they have more to gain by turning him in.

Either way, the army is the key.

[UPDATE] OK, now Mubarak is stepping down and has left Cairo.  Egypt's military is now in charge.