Is IE Dead? Again?

News.com has more on the IE issue. It ill be interesting to see what Microsoft does here. If IE is an integrated Longhorn only product, there might be some nice market opportunities for alternative browsers, such as Opera for older Windows systems such as 98, 2000 and XP. It's also good news for Apple that's looking to make Safari the default Mac OS browser of choice over time.

As I have written in the past, the whole thing is not a surprise.

Microsoft responds to comeptitive threat in several ways and typically uses three strategies to grow market share for a product.

The first strategy is to give incentive to users to purchase upgrades. Microsoft integrates new features and products into existing bundles as an upgrade motivator. Though some users feel compelled to upgrade, new features or not, the new additions raise customer satisfaction and offer incentive to upgrade earlier. Typically this is a strategy for growing market share of existing products that generate revenue such as Office.

Second, Microsoft integrates new features and lowers price points to gain competitive advantage. When a product is not doing well against competition Microsoft will keep adding features until buyers are compelled to view it as a great “value.” Microsoft has had some success in this strategy in its consumer level products such as Publisher and other low end creative and reference applications.

The third strategy is intended to build market share for a new product that has no market share or is clearly coming from an underdog position. Microsoft integrates the technology into its operating system and therefore gains the distribution power that Windows offers. Market share is built, but Microsoft must still work to assure that organizations and individuals will use the product and Microsoft must also foregos the ability to charge a separate license fee for the software. This is the case with IE and when the competitive threat is effectively removed, it ceases to be a major focus (as it does not generate a revenue stream in and of itself).

This strategy is one reason why we see IE development slowed and a greater emphasis on other integrated technologies such as instant messaging and Windows Media. IE is still important to Microsoft, but with no real competitor on the dekstop (the Opera folks will likely keep the mobility team pretty busy) we're not likely to see the leaps and bounds browser work that we saw in the mid to late 90s.

Posted by Michael Gartenberg at June 04, 2003 07:01 AM