Silicon Insider: Browser Wars

Jan. 6, 2005 -- -- The least-noticed big tech story of the last six months has been the rekindling of the Browser Wars -- a market struggle most of us assumed was over nearly a decade ago.

It is a reminder that, in high-tech, where change is continuous, there is never a permanent victory. And that even the walking dead can sometimes come back to life.

I remember having dinner in the mid-1990s with Marc Andreesen, then the wunderkind of Silicon Valley. His company, Netscape, was that era's equivalent of Google, and its impending IPO would put Marc on magazine covers and set off the dotcom boom. Netscape was the biggest shooting star high-tech had seen since Oracle, or perhaps even Apple, and Andreesen was the town's newest, and youngest, superstar.

We met at what was, and still is, his favorite restaurant, Hobee's -- a kind of funky, Marin-ish neo-diner. Marc drove up in a battered Mustang and unfolded his 6'3" frame to climb out. He was impossibly young -- in his mid-20s -- for a Valley tycoon; and in his worn jeans and blazing white running shoes, looked like a college junior.

Marc was also blazingly smart. He spoke in that soft, rapid-fire style of people whose brains are perpetually frustrated by the slowness of the spoken word. And as we sat munching on burgers, I just did my best to keep up.

I had assumed when he called about dinner that it was the standard network-maintenance deal: the new executive calls all the local reporters and editors in turn, takes them out to lunch or dinner, makes their acquaintance in hopes of being treated well in print (it doesn't usually work), and, at some point in the meal, make a brief pitch about how well the company is doing. Executives hate these things, as do reporters, and I tried to never do them.

But this was different. This was a Prince of the Valley, and he was not known as a person who did meet-and-greets. As it turned out, the dinner was unlike anything I expected.

For one thing, we never talked about Netscape. Instead, the entire evening revolved around a single question raised by Andreesen even before the burgers arrived: "How do we beat Microsoft?"

It was a rhetorical question, a plea, a demand, and a cry of despair all in one. For one thing, I was an editor, and not in the business of helping one company compete against another. Furthermore, I didn't even know Microsoft was going after Netscape; there had been a few rumors that MS, blindsided by the sudden success of Netscape Navigator, was secretly working on a competing browser design. So it seemed odd that Andreesen was so worried about what was, at best, a phantom competitor.

Gates' Competitve Streak

I don't quite remember what I told Marc that evening, but I'm pretty sure that I told him that Netscape had little to worry about. After all, it had created a gigantic new market which it essentially owned by itself; it was the darling of millions of Internet users everywhere, and it would soon be the toast of Wall Street. Microsoft had enough to worry about just debugging its new Windows 95 and trying to keep its many applications software products competitive.

No, Andreesen told me, you don't understand. We know Microsoft is coming after us. And when Microsoft targets a market, it always wins. No competitor has ever been able to stop it. Bill Gates will do whatever it takes to win. And he will never stop until he has won.

I remember giving Andreesen a few platitudes about how Netscape was a plucky firm, nimble enough to outrun any competitor, soon to be rich with cash to invest in new products, that it would take Gates and Co. a long time to catch up, etc. -- no doubt the same worthless advice he got from everybody else he talked to in the Valley.

Over the next few years I watched as Netscape went public in the wildest IPO of the era and made all of its employees -- especially Andreesen and chairman Jim Clarke -- very, very rich. And then I watched as the company grew distracted, fumbled, righted itself … and then got slowly crushed by Microsoft's Internet Explorer.

It was the go-go years of the late '90s, when everybody, including the Clinton administration, focused on creating the maximum amount of wealth no matter what the cost. And the smartest, most ruthless companies in tech, Intel and Microsoft, used the opportunity to grind up their competitors by outspending them, by blackmailing customers, and by bundling new products with established older ones.

Can You Beat Microsoft?

By the end of the decade, Netscape was gone, sold to the even more beknighted AOL. Microsoft's Internet Explorer ruled the cyberlandscape; the Browser Wars were over. By then I knew the answer to Andreesen's question. How do you beat Microsoft? You can't -- at least not head-on, and not by fighting a conventional war.

I suspect that's always been true in business; a giant, entrenched competitor -- be it IBM in the 1960s, or DEC and TI in the 1970s, or Motorola in the early 1980s -- can almost never be defeated by direct combat. Instead, you have to change the rules, either by inventing a new product category (such as the personal computer), finding a new group of customers (as IBM did to outflank Apple in the business market), or, if all else fails, by changing the very definition of success (as Intel did to catch Motorola).

Microsoft has proven to be a particularly implacable competitor over the last 15 years for a number of reasons, including: 1) There was no comparatively large competitor to fight it on its own turf; 2) Because Microsoft has a sense of history, it's learned from the mistakes of past monopolies (except dealing with the Feds); and 3) Bill Gates is a relentless competitor -- he fights to the death.

The last may be the most important. Gates, unlike his predecessors, never nods, he never seems to grow complacent. That was what Andreesen, young as he was, already understood: no matter how far you are ahead of Microsoft, you can never stop being vigilant: one slip, one moment of inattention, and Gates will run you down. More than Andy Grove or Larry Ellison or Steve Jobs, Bill Gates is the greatest competitor high tech has ever known.

The solution to the Microsoft challenge was always there, but it had to be relearned: Change the rules. Even as Netscape was dying, Linus Torvalds and the Linux crowd were inventing a new way to compete: open source. If Microsoft couldn't be defeated head-on, then attack it from a thousand tiny redoubts.

The timing was perfect. The one challenge a monopoly can't defeat is customer fear. It can't make itself small and unthreatening; its very presence constitutes infringement on individual freedom. Suddenly, as the new century dawned, Microsoft found itself beset (mostly unfairly) from above by the Justice Department for its actions during the Bubble, from the thousand pygmies of the Open Source movement, from millions of consumers who bought Microsoft but wished they didn't have to, and from the denizens of the underworld, the hackers, who slowly deflated Microsoft's greatest product: the security of buying from a big, safe company. All combined to put Microsoft in the one position an industry giant doesn't want to be: where its customers will resist buying even innovative new products and services from the company for fear that it will infringe on their future freedom and make them less secure. When your customers consider actively buying against you, your company has a big problem.

Browser Wars, Part II

And now browsers. Beginning in 1998, the e-mails I got from Andreesen started carrying the word "Mozilla," which I had never heard of before. As many of you know, Mozilla turned out to be the name of the open-source browser group created by Netscape and other firms that year. Mozilla had been all but forgotten, a mere footnote when it was announced last year that it would spin out of Netscape-AOL-Time-Warner.

But in the last year, everything has changed. Mozilla began the year by introducing a beta version of its new browser, Firefox. Incredibly, so great was the demand for Firefox 1.0 that by the end of 2004 it had driven Internet Explorer below 90 percent market share for the first time in almost a decade. Mozilla was also working with Nokia to create a Firefox browser for cell phones that would challenge Microsoft's ActiveX hegemony there. The success of Firefox has also revivified Netscape/AOL, which is ramping up to introduce a Firefox-based browser.

Meanwhile, a burst of activity by Google last summer, including the hiring of browser experts (including some of the people who helped invent Microsoft Internet Explorer) and the hosting of a Mozilla Developer Day on its campus, hints that Google too may be about to enter the fray -- thus kicking off what might be called Browser Wars II.

Not surprisingly, Microsoft has responded quickly, both by publicly deprecating the threat of Firefox, while also releasing a new service update pack that claims to reduce some of the IE's security problems. But that's playing defense, something Microsoft is lousy at. Meanwhile, the company's endlessly delayed Explorer 7.0 is only slated to appear bundled with the next generation Windows, code named Longhorn, which could be years away.

Has Gates finally nodded? Has Microsoft's CEO Steve Ballmer lost his fight? Hard to believe. Keep your eyes open over the next few months. If Microsoft releases a stand-alone Explorer 7.0, it will show that it is both scared of the upstarts and ready to rumble. If the company stands pat, a new competitive era will have begun.

Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor-at-large of Forbes ASAP magazine. He has covered the Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years, and in 2001, a 16-part interview series called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books. His latest book, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight."

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.