• by Tig Tillinghast , June 16, 2003

Microsoft has 80 percent share of the browser market, grown from zero in five years. Prognosis? Stop development due to imminent defeat. This is Microsoft's reaction to Apple's launching of its own browser on the Mac operating system, and it spells out Microsoft's true estimation of the power of an operating system monopoly. It also bodes a new era in technology - one in which product features and positioning take a back seat to distribution mechanisms, much like we see today in traditional retail markets.

Back when Netscape and others, the federal government among them, were suing Microsoft for foisting its browser and other elements down the throats of PC users, the software giant maintained that its success in overturning Netscape's market leadership was due to its marketing prowess. At the time, I happened to be one of the guys running that marketing effort, working for Microsofts online agency, but I'll take no such credit.

Microsoft gained share inexorably, and in direct proportion to people upgrading their computers that contained the monopoly's operating system. It was a sure thing, and there really wasn't much anyone could do about it. Microsoft took away the browser market easily because it had the monopoly, and it benefited (and benefits) from owning the browser market because it protects that same monopoly. This anticompetitive behavior is what made Microsoft last week agree to pay AOL - current parent of the Netscape shut-in - about three quarters of a billion dollars, among other goodies. Once the courts ruled that the company had a monopoly and had abused it, Netscape's civil case looked good enough that it required settling.

Microsoft has never really capitulated, however, to the idea that it has done wrong. It said that it incorporated the browser into the operating system (contradicting memos and emails turning up in court notwithstanding) because it was becoming a necessary integration element - not because it wanted everyone to have to use it. It said that the Internet Explorer technology would be increasingly integrated into its Microsoft Office applications because the market demanded it, not because it would squeeze out Netscape and other pretenders.

Were that true, it would now appear rather odd that Microsoft would turn tail and run out of the Mac browser market. After all, Microsoft owns the vast majority of the office application market on the Apple platform, making even more money per Apple computer sold than it does per PC sold. If browser integration proved so necessary with office applications, wouldn't it be suicidal to stop development on Internet Explorer for Mac?

These actions speak louder than their defensive words. It appears Microsoft recognizes the market reality that once an operating system developer decides to push an application, it will plow over all the competition. There is no level playing field, and fighting against it wastes time and money. It also suggests that integrating the browser - or other application features - with office software is more a mechanism of market control than of satisfying customers.

We are entering a tech world in which means of distribution trumps marketing and even trumps product quality. This was always true in the grocery categories and pretty much anything else sold at retail. The best product and clever positioning will never win against a behemoth's network of distributors. Proctor and Gamble will not consider your new shampoo recipe much of a threat. Microsoft isn't afraid of your software.