Microsoft's Share Of The Browser Market example essay topic

Battle of browsers: rounds one and two In 1994, Marc Andersen invented a new way to search and retrieve information from the Internet: the Netscape Navigator. Netscape's rising sales and the phenomenal growth of the Internet make its shares go through the roof and even before the Company had any profit; it was valued at $2.7 billion. However, the scenario didn't go that well for so long and a very powerful and ambitious man came into the picture. Bill Gates put 2,000 of his best programmers to create a browser of his own: The Explorer. The battle of the browsers officially started; Microsoft's share of the browser market increased from 2.9 percent at the end of 1995 to more than 40 percent by the end of 1997, while Netscape's market share fell to 54 percent. The Internet was growing at an outstanding pace and many people believed that it was going to affect every business.

However, Gates dismissed the Internet and Netscape as unimportant, saying that they would have no impact on him. He quickly found out how wrong he was and how these new threats in the environment were going to affect his business, and he managed to find the way for converting this threat into an opportunity. Thus, he changed the direction of his strategy and he entered into a new business: the Internet world. He realized that he was missing out an opportunity in the market that could make his company grow in a huge way; so he adopted a follower strategy, which is very ironic knowing that they have always been the leaders. He strategically fit-in by matching his resources and strengths (capital, know-how and people) to the changing environment. As Netscape was ahead he needed to act quickly before it was too late, so he took advantage of his power as a leader and focused on regaining position over Netscape by adding the browser as an integral part of Windows, giving free copies to the public and forcing manufacturers to install the browser on the machine.

In other words, he used his best existing resource which was Microsoft Windows as part of the strategy and used his monopoly to stifle competition and defeat its rivals. However, this strategic choice could have never succeeded at the business level, if Microsoft wouldn't have the competitive advantage of understanding the customer and the market as they do. On the other hand there is Netscape. Marc Andre seen knew from the beginning how promising the Internet world was so he worked hard to find an opportunity in this market.

He came up with an innovative way for searching information, he had the direction of his business very clear and he mainly focused on growth. Considering their internal environment, they had huge strengths like owning 80 percent of the booming browser market and being the first innovative mover in the field. They began building intranets and providing systems for companies to create their own web-like networks. Nevertheless, as soon as the Explorer came out their market share fell to 54 percent and their financial performance was badly affected. Their lack of money and power made Netscape too insignificant to compete with Microsoft. So they looked for help from the government by accusing Microsoft of unfair business practices.

The problem in this area is that technology changes so fast that there is no time for legal proceedings so they realized that the law was not going to help this time. Netscape has made good strategic choices for the future. They realized that the first battle of the browsers was lost and that they are not able to survive on their own. A new browser for information devices (set-to boxes, handheld computers and mobiles phones) came up and Netscape made a strategic choice by its merger with AOL. However, they need to be aware that for being able to create synergies with them, there must be a proper match between both. Netscape changed the strategic direction and now is focusing on this new browser market.

In this particular case, competition is fair because the choice of browser is made by the manufacturer or by the service provider rather than by the operating system supplier. So the strategy here is to target these people instead of the final consumer, and there are so many suppliers that it is difficult for just one company to dominate. Innovation plays a very important role in these two companies. Due to the fact that they are high technology products they rely a lot on research and development.

The success in this business relies on challenging the status quo in the industry and in the awareness of how an organization's resources can be stretched to create new opportunities. As mentioned above, Microsoft did very well in stretching its resources and changing the rules of the game (not so in line with ethics in this particular case), while Netscape did very well in being innovative. In the computer industry, life cycles are very short and leaders are vulnerable to their products being outdated by superior products from competitors. Thus, they have to act strategically against very short periods of time; otherwise they would be left apart. Bill Gates saw strategy as a design and as soon as he recognized Netscape as a serious threat he put his people to work on it. He didn't hesitate about this move and actually he ended up being the market leader.

However, even though Netscape lost this first battle of the browsers; they are not surrendering at all. The good thing is that, neither Microsoft nor Netscape have failed in looking at their development in other ways when it was necessary, which is something most companies failed at.