Big deal, huh? Well, yes. The raging browser competition may determine the ultimate rulership of the Internet. “Browser share is important to us,” says Microsoft’s Internet general manager Brad Chase. Understatement alert! The company’s main goal these days is integrating the Explorer with its Windows operating system, then getting millions of people to adopt it; this will ensure continued life for Windows as the computing world increasingly becomes Net-oriented. But currently the Netscape Navigator is the king of cyberspace, claiming 70 percent of the market. The ‘scapers are so far ahead that when pundits talk about “the Bill Gates of the Internet,” they mean Marc Andreessen, the twentysomething cofounder of Netscape. The AOL deal may help change that perception, not so much because of the deal’s outcome, but because of the way it underlines Microsoft’s self-described “hard core” effort to win this critical market, including a willingness to exploit its unparalleled resources as the ruler of desktop. A look at the particulars is enough to make Netscape fans shiver.
First of all, Gates kept God knows how many Microserfs working overtime to whip up a new version (also unveiled this week) of the previously bland Internet Explorer. In an uncharacteristic recognition of a competing technology, Microsoft redesigned the program to utilize special features advanced by Netscape and widely adopted by those designing Internet Web sites. “It was important to get the technology right,” says Case, who did not want to stick his AOL customers with a lame Internet browser.
What made Case really jump, however, was the opportunity to use Microsoft’s ubiquitous Windows 95 system as a tool to recruit new subscribers. When Microsoft announced last summer that a button on the screen would give zillions of users an instant sign-on to its start-up Microsoft Network online service, Case charged that Gates was taking unfair advantage. Now, Case is delighted that Microsoft will include AOL’s green triangle icon on new versions of Windows 95; a single mouse click will dial a modem and log on to AOL. As far as users are concerned, the deal boils down to this: AOL customers automatically get Explorer when they enter the Web; Windows 95 users are provided a direct connection to the AOL sign-up process. It’s a concession for Microsoft, which, of course, competes with AOL in the online business.
Microsoft could also afford to sweeten the deal with financial generosity commonly available only to Goliaths. Both Case and Gates say no significant fees will move from either company to the other, meaning that AOL is essentially getting Microsoft’s browser free. Microsoft, however, is not only giving its software away -it’s paying for the privilege. The core of the Internet Explorer is code developed by the University of Illinois and licensed by a company called Spyglass, which in turn licenses it nonexclusively to Microsoft. Gates & Co. pay a fee to Spyglass for every copy shipped. “We’re estimating that $2 million is likely to flow to us from this deal,” says Gary Vilchick, the chief financial officer of Spyglass. Think of it-when Netscape negotiates with the likes of AOL, it solicits a multimillion-dollar fee; the idea is to make money. Meanwhile, its competitor Microsoft is willing to cough up a few million to goose up market share.
“We’ve always thought it was naive for people to think that Microsoft couldn’t catch up [in the Internet race],” says Case. He rightfully notes that this head-to-head competition is good for consumers -more innovation, lower prices. Meanwhile, Netscape executives profess to be sanguine, claiming they always knew that the giant was not sleeping. Netscape vice president Mike Homer notes a significant difference between this war and the others where Microsoft has emerged victorious: unlike the case with operating systems, which lock users into a standard controlled by a single company, the Internet is wide open, and users are always free to switch their software. “If someone wants to buy [Internet] products today, who has the better products?” he asks. To maintain Netscape’s place as the leader of the Internet revolution, he says, “we’ll have to keep our heads down and stay focused.” They’d better. One major slip-up, and Netscape might learn that the only way to be the Bill Gates of anything is to be… Bill Gates.
