Chapter 74 Section 3 Netscape (Netscape)

In the history of the technology industry and even in the entire history of the industry, there are only a handful of companies that can outpace Microsoft's development speed and overshadow its limelight.Whether it can surpass Microsoft, even temporarily, has become the touchstone of a great company.Netscape was one of the few companies that ever eclipsed Microsoft. The battle between Netscape and Microsoft's web browser (Web Browser) has become the most talked about topic in the history of IT. We will only briefly mention one or two sentences here, and will not go into details. In the 1990s, the Internet began to rise, and a general-purpose web browser was urgently needed. In 1994, Anderson and Clark founded Netscape and launched the web browser "Netscape Browser" software with a graphical interface in the same year. The "Netscape Browser" became a huge hit when it was launched, selling millions of copies in less than a year. In 1995, Netscape, which had only been established for one year, was listed on the stock market. Under the pursuit of Wall Street, Netscape's stock rose from $28 to $75 that day, and has been rising since then, surpassing the early Microsoft.Although Netscape had become a hot company, Gates hadn't noticed the importance of the web browser at all, although his advisers reminded him repeatedly.Maybe, Gates just regarded the browser as a general application software at first, so of course Microsoft doesn't need to care too much.Instead, Wall Street expressed displeasure with Microsoft's hesitation in the Internet field.In November of the same year, Goldman Sachs downgraded Microsoft's stock from buy to hold, and Microsoft's stock fell accordingly.

When colleagues showed the Netscape browser to Gates again, Gates realized its importance.The reason why Microsoft can control the entire microcomputer industry is that it controls the interface that people cannot bypass when using computers-the operating system.Now, Netscape controls people's interface to the Internet, which means that if Microsoft can't take it back, it will be controlled by others on the Internet in the future.Gates realized that Microsoft had fallen behind in this field. He first wanted to buy Netscape, but was rejected by Netscape.Microsoft immediately sent someone to negotiate cooperation with Netscape, and Gates has been negotiating remotely.Microsoft's conditions were harsh, including capital injection into Netscape and access to the board of directors.Netscape is now facing a dilemma. If it agrees to Microsoft, it will be under the control of others from now on, and IBM and Apple, which have cooperated with Microsoft in the past, have no good results. On the contrary, if they do not agree to Microsoft, they may face disaster like Lotus and Word Perfect.In the end, Netscape chose to compete with Microsoft because it felt that at least for now it still had technical and market advantages.It was later proved that this technical advantage is not reliable at all, which is why I ranked technology out of the three conditions for forming a monopoly.For its part, Microsoft also officially declared war on Netscape.

On December 7, 1995, the anniversary of the Japanese attack on Pearl Harbor, Gates announced his foray into the Internet.Gates likened Microsoft's situation to that of the U.S. fleet being defeated by Japan.Gates informed many engineers that no matter what stage they reached, they should immediately stop their work and devote themselves to the development of Microsoft's browser IE.I have only seen Gates' courage once again in Page and Brin, and I can't find the third time in the world.Soon, Microsoft's IE browser came out, but its functions were far inferior to Netscape.Gates used his killing trick - bundled with Windows and provided to users for free.Due to the large technical gap with Netscape of Netscape, the threat of IE1.0 and 2.0 to Netscape in the market is not too obvious.But IE's growth rate has actually surpassed that of Netscape.

1997 was a turning point year.In October of that year, Microsoft released IE4.0 with stable performance.I don't know whether it is to value the users and talents of Silicon Valley, or to demonstrate to Netscape, the press conference was held in San Francisco, an important Silicon Valley town far away from Microsoft headquarters.That night, Microsoft employees went to Netscape to steal camp and rob the village, and put a large IE logo on the lawn in front of Netscape's headquarters building.This kind of prank is usually a trick played by engineering students in their teens and twenties. For example, MIT students once popped the MIT logo in the Harvard and Yale football games. The big pumpkin on the top of the school tower.It is rare for employees of a large company to play this kind of prank, so it is no wonder that the spokesperson of Netscape was also amused.

IE4.0 is very close to Netscape at that time, and even has its own advantages in some performances.That's when the bundling came into play, and users stopped downloading even the free Netscape.Netscape was defeated by Microsoft, which monopolized the operating system, with this non-technical and abnormal competition method.Microsoft finally gained control from users to the network. Since then, the Microsoft empire has been formed, and no company can challenge Microsoft in client software.The only thing left for Gates is to explain the legality of his actions to the US government's Department of Justice.

Although the antitrust investigation of Microsoft began as early as 1991, this time the US Department of Justice moved for real. In 1991, the Federal Trade Commission found that Microsoft began to compete unfairly through its monopoly position in the operating system, but the Commission finally voted 2 to 2 on whether Microsoft had abused its monopoly advantage to compete unfairly. If there is no conclusion, the case will be closed.This time, the evidence of Microsoft's violation of the antitrust agreement was solid, because under the 1994 settlement agreement between Microsoft and the US Department of Justice, Microsoft agreed not to bundle other Microsoft software with Windows.Now, Microsoft bundles IE with Windows.Netscape, of course, would not let it go.However, Gates quibbles that IE is not a separate software, but a function of Windows.Although for users, there is no difference whether it is a separate software or a function, but in court, this determines the outcome of a century-old lawsuit.

The U.S. Department of Justice sued Microsoft's antitrust lawsuit against Microsoft's monopoly behavior. In 1997, U.S. senators held a hearing. Gates, Netscape CEO Barksdale, Sun CEO Marconi, DELL founder Dell and other IT giants attended to testify.At the meeting, when Gates repeatedly emphasized that Microsoft did not form a monopoly in the software industry, Barksdale said, please raise your hands among those present who do not use Microsoft products.No one raised their hands in the hall.Barksdale reiterated, please do as I say, and still no hands were raised.Barksdale said, gentlemen, you see, one hundred percent, this is a monopoly, and that is enough to explain the problem.

It is a pity that although Netscape has received general sympathy from everyone, it cannot sustain itself until the court's ruling on Microsoft comes down.Almost everyone agreed that Netscape's failure was inevitable. Many years later, when Page summed up the lessons of Netscape, he found a way for Netscape to survive under the pressure of Microsoft's monopoly. Although it was an afterthought, it should be effective. After Google went public, Wall Street once worried whether Google would repeat the precedent of Netscape, and was finally defeated by Microsoft by means of bundling. Larry Page, the co-founder of Google, talked about this issue at a meeting, and his point of view was quite innovative and practical.

I can’t remember the exact words of Page’s words. The general idea is that almost everyone believes that Netscape is doomed to go bankrupt after Microsoft bundles and promotes its own browser, IE.Of course, Microsoft's unconventional approach to competition was powerful, but Netscape had its own problems, or it might have survived and thrived under Microsoft's pressure.Netscape, when its browser was sold to Internet users, did not prepare for danger in times of peace. It did not pay attention to controlling the content of the Internet, so that it lost the possibility of defending itself and countering Microsoft.It would have been the most likely Yahoo.

Here I explain what Page said based on my understanding.First of all, Netscape is not prepared for danger in times of peace.Let's go back to 1995 first.When Microsoft started developing its own browser, Netscape was unaware of the disruptive threat it posed to itself.This is no wonder, because when Microsoft defeated Word Perfect and Lotus in the past, it only took advantage of its own advantage of Windows, and did not use the free dumping method in commercial competition.Netscape was clearly ahead of Microsoft in terms of technology at that time, because Microsoft's early IE1.0 and 2.0 were like course design made by college students, with countless bugs, frequent crashes, poor compatibility, and many security holes.Even in the first few years when Microsoft took most of the browser market, Netscape's Netscape was still slightly better than Microsoft's.Netscape had a high profit margin at the time, and it believed that even if it fought a price war in the future, it would not necessarily lose (it did not expect Microsoft to push the price to zero).

As it turned out, Netscape's technological superiority was unreliable.We have presented numerous examples of technologically advanced products failing commercially in previous chapters.Netscape may not have imagined that users have no loyalty to web browsers at all-for most users, as long as they give him a free, pre-installed browser, it is enough.In this case, the loss of users is much faster than in general business competition. In 1997, when Microsoft employees put the IE logo in front of Netscape, the Netscape employees immediately responded to Microsoft, replaced it with their own logo, and wrote Netscape 72 and Microsoft 18, indicating that the two companies market share at that time. But Netscape's market share of four times Microsoft's was so unreliable that just a year and a half later, Microsoft surpassed Netscape's market share. Second, Netscape's business model is still selling software.This is Microsoft's successful business model, but it cannot be directly applied to other companies.In fact, when Windows95 came out, there was no world-class PC-based software company.Now the only surviving world-class software companies in the PC world, Symantec, Adobe, and Intuit all appeared before Windows95 (1982, 1987, and 1988).When Microsoft monopolized the microcomputer operating system, no decent software company went public and survived.The reason is very simple, if there is still a global opportunity in the microcomputer field, then Microsoft will not let it go and will crush all the main competitors (Meaningful Players).If Netscape wants to escape this fate, it must change its business model.In 1995, no company had a better chance of becoming the Yahoo that it is today than Netscape. Looking back in 1995, although there was not much content on the Internet in the world, there was no company that organized the messy content on the Internet.Yahoo is actually able to manually organize and index the content of the Internet, which shows how small the Internet is and how easy it is to organize Internet content.When Netscape came up with the Netscape browser, Yang Zhiyuan and Filo were still learning the HTTP protocol.Even if Netscape didn't see the importance of indexing and organizing Internet content at first, by the end of 1994, when Yahoo's traffic first reached one million visits, Netscape should have realized it.If Netscape took the road of Portal at that time, no one could stop it from becoming Yahoo later.Maybe the browser sold so well that Netscape didn't take action.When Yahoo was established, Netscape more or less saw the value of Yahoo, and provided Yahoo with servers, but did not buy it at a high price (or build one by itself).Netscape didn't even realize the value of the default startup page setting of its own browser at the beginning, and easily gave it to Yahoo, so that users knew Yahoo as soon as they turned on the machine, and easily raised the latter.I don't know if Netscape's Barksdale would have turned the company into a portal if we went back in time, but if you let Page take over Netscape back then, he would. Third, to compete with a company as powerful, ambitious and powerful as Microsoft, there must be a way to withstand Microsoft's repeated attacks and have the ability to counterattack twice or three times.In addition to the pre-emptive control of the content of the Internet mentioned above, another major method is to pre-install Netscape with PC manufacturers.The feasibility of this commercial approach has since been proven by Google and Yahoo.A year ago, Microsoft set MSN's search as the default search engine in the new IE, trying to squeeze Yahoo and Google again by taking advantage of the bundle.However, Yahoo and Google took advantage of Microsoft's move and pre-installed their own search toolbars on the computers of Hewlett-Packard and Dell, the world's top two microcomputer manufacturers, before leaving the factory, offsetting the impact of Microsoft's bundled search to a certain extent.Ten years ago, the cost of pre-installing software in microcomputers was much lower than it is now, and Netscape's browser was one of the most popular PC software back then, so it was not difficult for Netscape to persuade microcomputer manufacturers to pay for pre-installing it browser's. Fourth, although Netscape is catching users, what they are catching are users who buy Netscape software rather than users who actually use the Internet.At that time, it was in the early days of Internet development, and a free mailbox was very attractive to Internet users. Hotmail relied on this to obtain half of all Internet traffic at that time. This is what Jack Smith, the founder of Hotmail, told me personally. When Microsoft acquired Hotmail for US$400 million in 1997, it already had nearly 10 million users, making it the largest Internet user group that year.If Netscape can act first and acquire Hotmail, it will undergo a qualitative change in the comparison of its competition with Microsoft in the future. As the inventor of the essential browser for Internet users, Netscape could have become the leader of the Internet, just like Yahoo in 2000 and Google today.No matter how bad it is, it can become a major player (Major Player) in a field like companies such as Adobe and Symantec.However, Netscape disappeared from people's sight after only a few short years of glory.The decline of Netscape was certainly caused by Microsoft's monopoly, but it also had a chance to avoid bad luck, but it didn't grasp it well. Netscape was later acquired by AOL and had virtually no influence on the Internet.But it became Google's teacher, and its student avoided repeating the same mistakes.From this point of view, Netscape is also dead.