آثار جانبی اعمال نفوذ فن آوری در فن آوری های پیچیده: بهره برداری مایکروسافت از استاندارد در جنگ های مرورگر

Netscape enjoyed a 90% installed user base for its Navigator browser in August 1995 while the market share for Microsoft’s inferior quality browser was negligible. By August 1999, Microsoft had captured 76% of the browser market. Extant theory has focused on late entrants’ ability to win standards competitions through the development of products with superior quality/price performance. Yet this does not explain Microsoft’s success. Microsoft succeeded by leveraging installed user bases across vertically related markets, from Windows to IE. To date, little or no attention has been paid to the leveraging installed user bases. This paper addresses this by developing an analytical framework, based on a coupled Polya Urn model, that captures the dynamics of the Netscape–Microsoft battle. The framework highlights the strategic potency of controlling a proprietary standard in a vertically related market.

The web browser is a well-defined technological artefact that is used to communicate over the internet with web servers using HyperText Transfer Protocol (HTTP). When a user first opens his/her browser, the browser follows a link that reads a document written in HTML/XML and displays this in a window. To access a document, the browser uses the HTTP protocol to send a network request for this file to the web server where the document resides. The Web server then responds to the browser’s request and, by following the HTTP protocol, sends the requested document to the browser. The browser then interprets the HTML in the document and displays it on the computer screen. Clearly, the web browser is not a stand-alone product. Rather, it is one of a number of complementary components that together comprise the internet. These include content (media and services), hardware (cables, routers, servers, PCs), software (operating systems, browsers, and e-mail), communication protocols (WWW and TCP/IP), and design conventions (that provide website ergonomics and functionality to the user). The internet is thus a complex technology comprising numerous interacting components that are produced by a range of providers—both firms and individuals. Interoperability standards are important for the integration and development of a complex technology such as the internet because they enable vertically related providers to co-ordinate the supply and design of complementary goods and services through procedures other than formal collaboration agreements. In addition to common communication protocols and physical interface standards for the internet, process standards for software languages and tools govern the way in which different hardware/software components are produced. In this way, the complex system can be modularised, improvement in the quality of one product achieved without the need to make accommodating changes in the other products with which it interacts. Formal codification and monitoring of some internet standards are given over to government-sponsored institutions such as ISO, BSI and CEN, for others the responsibility lies with industry-led consortia such as the 3WC and the IETF, while some are the proprietary property of individual firms. The competitive advantage afforded by the private control of a standard can be significant. In addition to the revenues generated though charging for its use, considerable market power is derived through the control of product specification (what a product is), minimum attributes (what it does), compatibility (what else it can connect with) and ergonomics (how a user can interface with it). In addition to increasing its market power, the industry is placed on a technological trajectory that is closely tied to the competences and knowledge base of the standard-setter, subsequent incremental innovations by other firms being readily understood and absorbed. Indeed, as the Microsoft case study illustrates, proprietary control of one standard can be exploited in order to win a standards battle in a vertically related product market. The next section of the paper considers three aspects of the browser wars: the strategies of product quality, pricing, distribution and the cross-leveraging of installed user bases; the extent to which these strategies were exploited by Netscape and Microsoft, and the factors influencing the demand for rival browser products. While the outcome of the first browser war between National Center for Supercomputing Applications (NCSA) and Netscape can be understood by received theory, the outcome of second war between Netscape and Microsoft cannot. To this end, section three develops a coupled Polya Urn model that is capable of explaining the second browser war. The final section summarises the strategic policy lessons that can be drawn from the Netscape–Microsoft war. For the sake of clarity, the paper does not concern itself with the merits of the long anti-trust case brought against Microsoft by the US Department of Justice. This lies outside the scope of the current paper. Having said this, access to detailed documentation on the strategy of a large corporation such as Microsoft is unprecedented, and certainly assists the analysis.

Extant theory tells us that late market entrants can win technological standards battles by introducing products with superior quality/price performance. This cannot explain, however, the second browser war between Netscape and Microsoft. This particular case study highlights the importance of identifying and exploiting linkages between the vertically related products that make up a technology system. In particular, Microsoft’s linking of two product markets—the browser and the operating system—enabled it to exploit market power in one market in order to win a standards battle in the other. Further, in order to speed up the process, it exploited its advantage in distribution to ensure that new internet adopters were automatically offered its browser when they acquired a new PC or registered with a major ISP. With regards to quality and price, Microsoft’s strategy involved the development of a browser of approximately comparable quality and price. They were not superior, however. In order to examine the dynamics of the Netscape–Microsoft war, a coupled Polya Urn model was developed. The results of simulations conducted on the model clearly indicate the powerful, and rapidly acting, consequences of cross-leveraging installed user bases between vertically related markets. In particular, it highlights the ability of Microsoft’s strategy to at once nullify Netscape’s initial advantages. This paper considered the case of two rival variants in two vertically related markets. However, the model can be extended to a greater number of markets (urns) and a greater number of competing variants. Such an extension would be useful in addressing strategy formation for the internet and other complex technology systems. For example, one could analyse the circumstances under which a competitor could overcome Microsoft’s monopoly in the browser and operating system markets. At first glance it would seem that AOL missed an opportunity to mount a challenge, following its acquisition of Netscape. However, qualitative inspection of the model suggests that AOL made a wise decision. To begin with, Microsoft’s combined IE-Windows user base dwarfs that of AOL-Netscape. Second, AOL would need to develop a technical proprietary link between its portal software and the Netscape browser that could not be emulated by Microsoft. This is unlikely. Indeed, Microsoft’s proven ability to match Netscape’s browser means AOL could not necessarily expect to gain a competitive advantage through investment in further R&D. Finally, despite AOL’s leading position in the ISP market, Microsoft’s has superior control of the conventional distribution channels through its deals the leading PC distributors and ISPs. The browser case study provides a precautionary note to recent research on open software standards and innovation networks. Much of the recent literature on Linux, for instance, has suggested a tendency towards the development of open platform standards. Yet here is an example of an initially open, non-proprietary standard being captured, first by Netscape and then by Microsoft, in order to strengthen their position within the software industry. The case study illustrates there are strong private gains in capturing a key component of a technology system. Clearly, more critical research is required in this area. Similarly, the case study suggests more caution needs to be taken with respect to strategic alliances for innovation. Much has been written about innovation networks and the potential benefits associated with this particular mode of organising technological innovation. Netscape established strategic alliances and carefully managed its relationship with third-party providers. Yet, it was Microsoft who won the browser war. It is therefore not clear, ex ante, whether collaborative innovation is more efficient than the internal coordination of innovation. To summarise, the browser battle opens up important new insights into the dynamics of technological competitions in which the leveraging of cross-product externalities play an important role in determining the final outcome. The case study calls for a reappraisal of some of the lessons that have been drawn from previous work on technological lock-in. In particular, future research will need to distinguish between autonomous technologies and complex systems that comprise a number of related technologies. The strategies employed by Microsoft have important implications, both for lock-in theory and for managers seeking to apply its lessons in technological competitions.