Battle of the Browsers

Will Netscape survive Microsoft's strong-arm tactics,
as the two software giants prepare for a showdown?
The billion dollar stake - Web dominance.

Since Microsoft's Internet browser first squared up to take on Netscape Communications about a year ago, the high-tech, high stakes battle for dominance on the Internet evolved from a mere "tit for tat" into outright corporate war. As the stakes changed and the pressure to get advanced versions of their internet software to market increased, developers Microsoft and Netscape kept a wary eye on the strategies and technical developments offered by the opponent.

But the uneasy calm was not to last. Just one week after the launch of Microsoft's Internet Explorer 3.0, Netscape Communications Corp. complained to the US Justice Department that Microsoft was unfairly preventing some computer users from using Netscape's software.

Although Netscape seems to have the lead in the market for now, it has good reason for keeping tabs on its larger adversary. Microsoft has a "take no prisoners" attitude towards its marketing and software development strategy, says industry analyst, and Netscape has to play it cards right. If not, it may fall by the wayside as many great names in the software industry which were literally muscled out of the market by Microsoft's aggressive marketing machine. In a letter to Microsoft which was copied to the Justice Department in mid-August, Gary Reback, Netscape's lawyer, accused Microsoft of antitrust violations by placing limits on the number of Internet connections that can be made to a single copy of Microsoft's NT Workstation software.

The limits are specified in Microsoft's customer-licensing agreements. Reback's letter said the limits impinge on Netscape's ability to sell its own Fastrack Server software product for use with the NT Workstation. Netscape's complaint was in response to Microsoft's objections to what it calls deceptive price comparisons used by Netscape, according to Reback.

Speaking to reporters at the MacWorld Exposition in Massachusetts, USA, Netscape's Chief Executive, Jim Barksdale said it was absurd for Microsoft to try to impose limits. "I think it's absurd and we're not going to permit them to limit access. We told them it was a restraint of trade," he said. However, a spokesman for Microsoft called Netscape's letter a "public relations ploy" and said there was no substance to the claims. Reback, said that the real antitrust issue is the manner in which Microsoft is attempting to "catch up" with Netscape in the Internet browser market. Unscathed, Microsoft Corp. is going full speed ahead with its plans to encourage Web surfers to give its new browser a try.

Over the years, its products have outshone the successful offerings of its competitors. WordPerfect, which once had the top-selling word processor, fell victim to Microsoft Word. The same thing happened when Excel eclipsed Lotus 1-2-3 as the number one spreadsheet for Windows. As part of their plan to make the most of the Internet, they've now set their sights on Netscape Communications Corp.'s line of Web browsers. Likewise, Explorer's release has set the stage for a fierce battle between Microsoft and Netscape, which released the latest version of its browser just one week later. Not giving Microsoft the chance to anchor its feet after the launch, Netscape wrote the US Justice Department for a second time in August, accusing the software giant of illegal conduct stating that the company violated the 1994 antitrust consent degree reached with the government. The consent degree mandates that Microsoft must not use its dominance in the operating-system market to hinder consumer choice.

In Netscape's latest letter, the company charged that Microsoft:
1. made PC manufacturers pay $3 extra for each personal computer using Windows '95 if they wanted both Microsoft's Internet Explorer and Netscape's Navigator included. Netscape estimates Microsoft sold 40 million copies of Windows '95 in the product's first year, meaning that manufacturers paid an extra $120 million.
2. offered corporate customers free operating-system upgrades and consulting. Also, Microsoft allegedly paid international telecommunications customers $5 for every Netscape Navigator browser that they dropped and replaced with Internet Explorer.
3. offered to buy out contracts that large Internet service providers have with Netscape. Microsoft also allegedly offered $400,000 if the providers promised not to sell Netscape or other Internet software.

In its latest letter to the Justice Department, Netscape said Microsoft has, "resorted to a wide variety of predatory pricing and bundling behavior that violates antitrust laws." Netscape asked the Justice Department to take immediate action on its complaints. The company also offered to supply witnesses who will back up its accusations against Microsoft.
Netscape further said the Federal Trade Commission has expressed interest in handling the case if the US Justice Department was too thinly staffed to take on the battle issue.

Brad Chase, Microsoft's senior vice president in charge of Internet Platforms, called Netscape's charges "wild and untrue." But Chase specifically denied only one of Netscape's points of contention - that Microsoft charges an additional $5 for its Windows '95 to PC manufacturers who install Netscape's browser on their machines.

Explorer 3.0 catches up with many features in Netscape's Navigator and adds some new ones, including a data-search service connected to search-engine developer Yahoo Inc. Chase also said the company has been working as fast as any in the industry to catch up with Netscape. The result, he said, is a product that Microsoft believes is a step ahead of its competitors.
"Hundreds of people worked on it, taking customer feedback. We want people to try it and compare it with the choices they have," Chase said. Microsoft hopes that a recent flurry of content deals will help convince Internet users to take the plunge. The company has signed deals with ESPN, The Wall Street Journal and other content providers. That means Explorer users will be able to go to specific sites and access the available content at no additional charge.
"They're win-win partnerships," he said. "Their customers get the benefit of Explorer 3.0 and our customers get the benefit of their services and the content they provide." Chase confirmed that Microsoft has also been talking to other Internet providers in an effort to get them to include Explorer in software bundles given to their customers. He conceded that in the past, Netscape had been a leader on that front, but he feels that the superiority of the new release will convince providers that Explorer does enhance their users' experience.

Already, there has been a lot of talk about the features planned for version 4.0. Microsoft intends to tightly bundle the browser with the existing capabilities of the successful Windows '95 operating system. "The ability to browse your hard disk or local area network should be no different than browsing the Web. We want users to get a richer, more compelling experience on the World Wide Web," he said. He conceded that Microsoft has a lot of ground to make up if it's going to push Netscape's familiar icon off computer desktops, but he's convinced that they can close the software and preference gap with Netscape by the end of the year.

Achieving this dream may not be as easy as it seems. Rumours circulating that the software was not properly tested before release could set back his plans for Explorer. The speculation was fueled by the discovery of a "software bug" which slowed access to some protected sites on the net. According to company executive Bill Koszewski, the flaw will slow access to users trying to gain access to some Websites which require readers to register their name and a password.
"That is in fact a known issue, and we are working on a fix for it right now," Koszewski said. While Microsoft has not yet figured out how to fix the problem, Koszewski said the flaw was merely "an inconvenience issue" and does not affect the security of Web sites or data on a user's personal computer. Some sites on the net require users to register their name and password to gain access, but the flaw forces users to register every time they move to a new page within the protected site. Koszewski said the problem apparently "crept in" somewhere between the final test version and the final release in August which was launched by Microsoft's Chairman, Bill Gates, at a ceremony in San Francisco, USA.

Netscape also claims that MS Explorer crashes on some Java intensive sites. This issue does not seem to deter cybersurfers as more than 2,000,000 copies of the software have been downloaded or included free in Microsoft's products. Netscape, on the other hand, has made an effort to get the best mileage possible out of the flaw in Explorer 3.0, with the launch of its new Navigator just a week later in early August. An advanced feature of Netscape Navigator 3.0 is its ability to automatically search out content from the Internet, based on the user's specified interests, and deliver it to his personal computer. In addition to the basic features offered by its competitor, Netscape executives boast that their browser will be able to support 3-dimensional video eMail.
"Our plan is to make the Internet a natural part of the everyday life of consumers by developing ways to integrate their software into everyday products." This plan is expected to allow Netscape to keep its edge on Microsoft and executives have already announced the formation of Navio Communications Corp, to develop and market the new products. The company hopes to put its software in everyday consumer products like televisions and telephones. Netscape hopes to make its technology the industry standard for linking small, inexpensive consumer devices to the Internet. Microsoft has also been working on similar operating systems for years.

The new strategy takes Netscape's battle with arch rival Microsoft to a new level. So far, the main rivalry has been in the personal computer market.
Tim Bajarin, president of Creative Strategies Research International in San Jose, California, said Netscape is making a strong bid to become the "front end" for any digital device - PC, hand-held computer, set-top box or smart phone - linked to the Internet. "This is a very important strategy for Netscape - and one that will work, because they don't have any operating system baggage," he said. Netscape's browser works with computers running Microsoft's Windows, Apple's Macintosh Operating System (OS) and other systems. But Microsoft's Internet Explorer works only with Personal Computers (PCs) running Microsoft's Windows '95 and Windows NT operating systems. Microsoft has been trying to produce versions of its operating software and browser for hand-held computers and other devices linked to the Internet but has not yet explained how they will work, Bajarin said. But Microsoft, he added, will probably do that sooner following Netscape's latest move. "I'm sure they don't want the mind-set of digital appliance makers to be pushed strictly to Netscape," he said.

Navio Communications, which already has 50 employees, will be an independent company owned mostly, but not exclusively, by Netscape. A report in the New York Times said Netscape's allies in the new company were IBM, Oracle and four Japanese consumer electronic concerns - Sony, Nintendo, Sega Enterprises and NEC, dominant in producing a variety of home-entertainment products. Its chief executive officer will be Wei Yen, a former Silicon Graphics Inc. vice president. Netscape's founder and chairman, Jim Clark, will be chairman of Navio Communications. Alan Stock, a marketing executive with Navio Communications, said the new company hopes to announce products by the first half of next year.

In their current products however, both Microsoft and Netscape have packaged their latest browsers with free access to popular, fee-based Internet sites. Netscape's Navigator 3.0 offers five months of free access to the New York Times' Personal Edition, SportsLine USA and other online services. Microsoft's package includes the Wall Street Journal's online edition and ESPNET SportsZone. Netscape's Senior Vice President, Mike Homer, said in an interview that Netscape felt compelled to respond to Microsoft's promotional moves.
"They have a lot of money and a bigger megaphone. We are doing our marketing with a more head-to-head comparison so people will understand the differences," he said. Each company's latest browser does a better job than its previous versions in supporting multimedia content - Navigator 3.0, for instance, transports live audio and video - and each company's browser allows telephone calls via the Internet.
But Internet Explorer is free.

Netscape Navigator 3.0 is free for a 90-day trial and then costs US$49.95 for a license to use it. Users in educational or non-profit organizations can continue to use it free. Navigator 3.0's content delivery feature, called Netscape Inbox Direct, allows users to register with various participating content providers on the Internet - such as Sony Music, the New York Times, and HotWired - tell them their interests, then, the news, music, or whatever is delivered daily the user specified on the Inbox feature on their Navigator Browser. "With Netscape Inbox Direct, users don't need to spend time finding interesting sites and fetching their daily news from many different sources," Homer said. "Instead, it is like in the real world where people choose to have magazines delivered to their homes and don't have to go searching through the Internet."

Executive Time "Online" also has a printed version which is available throughout the Caribbean and some selected North American cities.