Federal Action Leaves Windows Strategy Clouded
Monday’s Justice Department action casts huge doubt on Microsoft’s Internet strategy, which the company has pursued with singular vision since Chairman Bill Gates gathered the media and analysts for a briefing in Seattle nearly two years ago.
In particular, the department’s court petition clouds Microsoft’s next big operating-system upgrade, Windows 98. In that upgrade, to be released next spring, Microsoft integrates its Web browser with the operating system.
The merging of both technologies clashes head-on with Justice’s objection that Microsoft is forcing computer makers to license Microsoft’s browser, which enables users to navigate the Web, as well as its operating system. Windows 98 also would require Windows users to use Microsoft’s browser for at least part of their Web access.
“These are two different products,” said Joel Klein, assistant attorney general and head of the antitrust division, at Monday’s announcement. “Each of Microsoft’s products should compete on its own merits.”
Stuart Johnston, a senior editor and columnist for InformationWeek magazine, noted that Microsoft has “bundled” products and features into Windows for years without being charged with a violation. The Justice Department’s latest move, he said, suggests heightened interest in the browser-Windows pairing.
“That may indicate there’s an underlying issue of merging browsers and the graphic interface,” he said. “So that could mean that Windows 98 has trouble coming.
“Quite frankly, this appears to be a pivotal event in Microsoft’s history.”
Microsoft has spent millions of dollars producing Windows 98 and is in the final stages of testing the program. If past practice hold true for Windows 98, the system once released would ship on every new IBM-compatible personal computer. About 60 million new computers are sold annually.
At the 1995 briefing, Gates said Microsoft would “embrace and extend” the Internet by giving away free its Web browser, Internet Explorer.
Over time, Gates said, Microsoft would incorporate Web access into its dominant personal-computer operating system, Windows, to the point where the Web would seem to users like a part of Windows.
Gates’ announcement was seen as a huge strategic win for Microsoft in its effort to capitalize on the Web’s then-sudden success. It also was deemed a fatal blow to Netscape Communications, which made the most popular browser, Navigator. Netscape’s stock price dropped more than $30 a share after the announcement.
At the time, Microsoft’s browser had few users, a market share of “essentially zero,” Gates said. After the announcement, Microsoft continued to improve Explorer, gaining favorable software reviews and adding market share.
When both companies released versions 3.0 of their browsers in August 1996, it touched off a “browser war” that continues to this day.