The Netscape Web Browser: A Challenge to Microsoft's Dominance

The Netscape Web browser

69. Netscape Navigator possesses three key middleware attributes that endow it with the potential to diminish the applications barrier to entry. First, in contrast to non-Microsoft, Intel-compatible PC operating systems, which few users would want to use on the same PC systems that carry their copies of Windows, a browser can gain widespread use based on its value as a complement to Windows. Second, because Navigator exposes a set (albeit a limited one) of APIs, it can serve as a platform for other software used by consumers. A browser product is particularly well-positioned to serve as a platform for network-centric applications that run in association with Web pages. Finally, Navigator has been ported to more than fifteen different operating systems. Thus, if a developer writes an application that relies solely on the APIs exposed by Navigator, that application will, without any porting, run on many different operating systems.

70. Adding to Navigator’s potential to weaken the applications barrier to entry is the fact that the Internet has become both a major inducement for consumers to buy PCs for the first time and a major occupier of the time and attention of current PC users. For any firm looking to turn its browser product into an applications platform such to rival Windows, the intense consumer interest in all things Internet-related is a great boon.

71. Microsoft knew in the fall of 1994 that Netscape was developing versions of a Web browser to run on different operating systems. It did not yet know, however, that Netscape would employ Navigator to generate revenue directly, much less that the product would evolve in such a way as to threaten Microsoft. In fact, in late December 1994, Netscape’s chairman and chief executive officer (“CEO”), Jim Clark, told a Microsoft executive that the focus of Netscape’s business would be applications running on servers and that Netscape did not intend to succeed at Microsoft’s expense.

72. As soon as Netscape released Navigator on December 15, 1994, the product began to enjoy dramatic acceptance by the public; shortly after its release, consumers were already using Navigator far more than any other browser product. This alarmed Microsoft, which feared that Navigator’s enthusiastic reception could embolden Netscape to develop Navigator into an alternative platform for application development. In late May 1995, Bill Gates, the chairman and CEO of Microsoft, sent a memorandum entitled “The Internet Tidal Wave” to Microsoft’s executives describing Netscape as a “new competitor ‘born’ on the Internet.” He warned his colleagues within Microsoft that Netscape was “pursuing a multi-platform strategy where they move the key API into the client to commoditize the underlying operating system.” By the late spring of 1995, the executives responsible for setting Microsoft’s corporate strategy were deeply concerned that Netscape was moving its business in a direction that could diminish the applications barrier to entry.