TECHNOLOGY - Browser 'bout that then?

Unless the DoJ decides to take really tough action, Microsoft will be the sure-fire winner of the browser war. But why, and how, did Netscape lose out?

Although the skirmishing continues, the browser wars are effectivelye the sure-fire winner of the browser war. But why, and how, did Netscape lose out? over. For some time now, it has been questioned whether the outcome can be legally challenged and ultimately if the prize is worth the fight. And also, who will pick up the pieces in the form of Netscape.

You could say the browser wars ended before they began, just over two years ago when Microsoft CEO Bill Gates, in his celebrated Pearl Harbour speech - so-called because it was delivered on 7 December, the anniversary of the bombing of Pearl Harbour - announced that Microsoft was re-conceiving itself around the Web paradigm.

At that time, Microsoft was well known for being weak at networks. The software developer had failed to set the world on fire with Lan Manager - referred to as Lan Mangler - and had launched its own half-cocked competitor to the internet, Microsoft Network (MSN).

It is difficult now to recall just how revolutionary Microsoft's move seemed at the time. With the 'graphical internet' or Web barely three years old, major software vendors and telephone companies were still deriding the technology as buggy, immature, not scaleable and insecure.

The internet was painted as a haven for nerds, geeks and social misfits with a substantial mixture of the mad, bad and sad. It seemed a major gamble to bet the (highly profitable) farm on a new technology which was run, overwhelmingly, on Unix boxes. Yet for Gates, the Web potentially addressed a number of the key issues which limited Microsoft's expansion into market segments traditionally almost closed to it.

In a nutshell, the Web could allow Microsoft to sidestep its networking weaknesses and push its software further up the corporate food chain where IT managers were traditionally hostile. And it would do this using the same technology which appealed to its home ground - consumers, homes and small businesses which happily used Microsoft software.

But Microsoft took one step beyond that idea - it decided to merge its browser with its operating system. While email is still the most commonly used internet application, the browser is the unique and focal Web tool.

Microsoft needed a good browser to embrace the Web, and a better one still if its browser was to fulfil everything that was planned for it.

Also, as the user interface to the Web, a proprietary standard was not only possible, but powerful.

The internet was run by people who wanted to get things working, and that meant standardising the networking protocols. By and large, until the Web came along, the internet community hadn't thought about the user interface, but the Netscape team spotted the chance. Netscape was formed to create a universal client front-end, which would run on all systems but was owned by one company.

Netscape had several months' head start on Microsoft. It understood better the means by which internet users adopted software and its tactic of giving away the browser free instantly gave it a massive user base. Netscape also recognised what a powerful weapon the user interface could be, if it got into a lot of hands. And they did this by using the internet's own methods: distributing free versions of the software.

Within a few months, Netscape was claiming to have more people using its Navigator browser than Microsoft had using Word. And then came Pearl Harbour. Microsoft was not slow to see the strength of a standard GUI - it already had that stranglehold on PCs. The Windows GUI was the most widely used computer 'dashboard' in the world. Microsoft knew if it could provide the most widely used internet dashboard - the set of controls people used to access the internet - then it could annex all kinds of other areas.

Obviously, Netscape was the only significant enemy - and battle was joined.

What was surprising was how quickly Microsoft picked up the vernacular of the internet - and extended it with its own concepts. Free software was the thing, so it made sure its Internet Explorer browser was free, not just as a downloadable demo, but for ever.

Initially, the contest was a technical one. It went on features and functions.

The basic tools of Web browsing were being decided; standards for tables, frames and other fancy presentation were being settled, and it seemed to make sense for each side to offer its own spin on those. As long as a feature did not have a clear standard, it was possible to gain some advantage by adopting a specific solution for that feature.

This phase did not last long. On the technical front, the Web's standards body - the World Wide Web Consortium (W3C) - made the peace between the two by admitting Microsoft specifications and suggestions on equal terms with those from elsewhere.

By summer 1996, Microsoft's Internet Explorer had reached the magic Release 3 - when, like Windows, and most other software, it is finally usable. At this stage it was arguably as good as Netscape's Navigator, and the technical phase of the contest was over. In moving to version 4, both browsers have added little that is not an optional extra. Both have concentrated hard on push technology, but it has yet to make much impact on the market.

As US commentator David Strom, points out, the vast majority of the internet population still use browsers which are version 3 or earlier. Version 4 browsers, he says, 'have too few enhancements that the public really needs, are way too unstable, and are still far from being on most people's desktops.'

Strom reckons the version 4 population is around a quarter to a third of current users, with about half the internet's population still using 3 versions. The figures are based on statistics from servers which poll all visitors.

So, technology finished with as a point of contention, that just left the marketing. Netscape did not stand much chance. Microsoft has deeper pockets to subsidise the browser giveaway. It could put the browser on the desktop - and that's virtually every desktop in the world.

Not wanting to place their intranets entirely in the hands of Microsoft, corporate customers initially preferred Netscape. But as the combination of Windows NT with Microsoft's IIS server has gathered momentum, resistance has faded. Netscape still had the non-Microsoft world, but eventually Microsoft has produced versions of Explorer for other platforms. Even, perish the thought, Unix.

The biggest market push by Microsoft is due when with the next release of Windows, the Explorer browser becomes the window into the system's own internals. But then there was government intervention.

The US government has the world's fiercest anti-monopoly legislation.

Microsoft has an almost watertight monopoly of the PC operating system and a near monopoly in several software segments. Competitors are constantly egging the Department of Justice (DOJ) to act against perceived abuses of that monopoly position.

Microsoft was challenged for bundling Internet Explorer with Windows95.

The company agreed terms with the DoJ, so that it is at least not in contempt of court with current versions of its OS. But the issue of Windows98 - where the browser becomes an integral part of the operating system - remains open.

At this point, the browser is no longer a separate thing. Microsoft has argued that there is nothing in its previous agreements that prevents it from adding this function to the operating software.

Companies from Stacker on down will testify to the way Microsoft has added functions in the past. The addition of Windows itself certainly dented the potential for business for GeoWorks, GEM and other DOS GUIs.

Short of breaking up Microsoft, there is little the US government can do in the long term. (That is not to say a breakup is unthinkable. The US did it with AT&T to create the 'baby bells' and prevented the re-emergence of the concentrated banking structure which exists in most other countries.)

The main line of appeals and counter-suits will continue, and it still looks as if - whatever happens in court - the browser and the operating system will become a merged entity, just as the GUI and operating system have been since Windows3.1. But the browser is a natural monopoly, and if the US government wants to ensure Netscape remains a competitor to Microsoft, it will have to do more than provide a 'level playing field'.

If both browsers are sold separately to the operating system, at similar prices, Microsoft would still win. Its browser would be the one you didn't have to think about. Just as railway tracks are required for trains to run, so the browser will be required for other applications, says Teague Donahey, lawyer of the Silicon Valley law firm of Skjerven, Morrill, Mac-Pherson, Franklin & Friel.

He drew a parallel with a 1912 case in which the US government required the Terminal Railroad Association of St Louis to allow free access to its railway tracks.

'The browser market will tend towards natural monopoly,' says Donahey.

'Railroad hubs and operating system software have many critical features in common. In turn, the software application market is analogous to the railroad shipping and transportation markets in Terminal Railroad - both constitute complementary markets reliant upon access to the primary market for success.'

By using the same look and feel on the browser and the operating system, Microsoft could ensure that users found their browser easier when they wanted to look outside their system - on to the Web and the corporate intranet.

'If Microsoft is asked to unbundle IE from Windows95, and Windows98 is allowed to keep the metaphor throughout its operating system, there is only one way to segregate it from IE over the internet and that is to have an optional internet icon,' says Peter White, Computerwire CEO, in a recent open letter in his publication to the judge.

'So you would use IE to wander around your hard disk, and perhaps the network neighbourhood, but as soon as you go out to the internet you would choose whether or not to go with IE or with an independent browser such as Netscape.'

But even that wouldn't do it. As White says: 'If they are both free, Microsoft would automatically win by having the look and feel of IE trained into every computer user. Why learn IE and Netscape, when you have to learn IE and it's free?'

So, even if the court imposes the maximum penalty discussed so far, Netscape loses. So, what can the court do? White thinks it should set a price on browsing the internet, and on the operating system, in line with the cost of development. Even then, the court would have to ensure that IE costs more than Netscape's browser.

'To walk into a retailer and say I'll have Windows98 and the Netscape browser, and pay the same price for it as a machine with Windows98 and IE, is not enough because the habit of using the IE metaphor would destroy Netscape. The price must be different and extra to add IE, even if it is not extra to add Netscape.'

But forcing suppliers to charge for something they have been giving away would be unpopular with everyone.

'Users grew up in an era of abuse when they just expect Microsoft to take all the goodies. The court needs to avert the biggest corporate disaster in technology history by being brave about it. It's not that I don't want to watch the Microsoft movie, on a Microsoft TV driven by a Microsoft set-top interface, delivered by a Microsoft line using a Microsoft protocol.

It's just that I want the choice, and I think the US would applaud a courtroom decision that gave us all that choice,' admits White.

Donahey doesn't agree. In a natural monopoly, he says, regulation does not work because competition cannot be produced artificially. Splitting Microsoft up into a browser company and an operating system company would reduce its innovation and stifle development. Creating a competitor would do the same thing. Donahey believes the answer is to apply the 'essential facilities' doctrine of US monopoly law, in which the natural monopolist is required to give services free access to the thing it monopolises.

In this case, that would mean Microsoft being forced to offer its APIs.

Meanwhile, Netscape appears to be waiting for the end of the war: refocusing on its server software - the source of the majority of its revenue for some time now - giving away its browser entirely free, and waiting to see who will buy the company.

Giving away its browser is, of course, a smart move, and the company has gone one better in giving the source code, which could generate a series of customised Netscape browsers for niche markets. Developers can use it for free and resell the results with no royalty to Netscape.

It will make little difference to individual users who have simply been downloading free beta versions, but it will for corporates.

Corporates have had to pay for Netscape, and this is where Microsoft is mistrusted most. Allowing them free access should bolster Netscape's market share.

Corporate users regularly adopt Explorer, with some misgivings, because they can't budget for a paid-for browser. The price of a Netscape browser is small, but it mounts up on installations for thousands of users. The evidence of proprietary hooks in the Microsoft product is unclear, and most of those desktops are running Microsoft code anyway, so the balance often comes out in favour of Explorer.

The Web enabled the browser as a universal client. Netscape and Microsoft both appear to have misheard this as an invitation to establish their client as universal.

Very few users are interested in the operating system. The interface which matters to them is the interface to the applications - for whichever functions they want - and that is what the competition is about. It is as if someone had copyright on the car dashboard, the steering wheel, and the order of pedals on the floor. No one else could make vehicles that way.

In that situation, if one company had a monopoly in private cars, nobody else could get a look in when that company decided to move in on other vehicles. 'Control of e-commerce - all online shopping and banking, in other words everything that can be sold electronically - will come indirectly from controlling browser installs,' warns White.

As he points out, browsers can deliver secure transactions, security certification, the route to a full digital internet identity for everyone, electronic data interchange, back office communications between every corporation and its suppliers and access to oceans of information - to everyone's home internet use, delivery of video objects of all types, and strong leverage into the future set-top or home entertainment computer.

'Do we really think that Microsoft automatically deserves a percentage of every part of this,' he asks, 'simply because it wrote a nice operating system many years ago?'

The real question is what should Microsoft be made to do with the piece it will inevitably get of this.