Sunday, April 16, 2006
Lessons from the Browser Wars
In a famous example of how first movers can lose their advantage, second-mover Microsoft won the Web browser wars from Netscape and continues to dominate the market today. But that competition was the subject of another "war," this one among researchers who study how technology is diffused into the market.
The debate was this: Did Microsoft win because its Internet Explorer was the technologically superior product to Netscape Navigator, or was Microsoft just more successful at the distribution end by convincing most PC companies, some argue by anticompetitive tactics, to include IE on every PC shipped in the late 1990s? Researchers line up on both sides of the argument.
A recent working paper by Harvard Business School professor Pai-Ling Yin and Stanford professor Timothy F. Bresnahan offers an answer. Looking at both the pace of adoption of new versions of the browsers and the brand choice made by users, "distribution played a larger role than did technical progress in determining the market outcomes," the scholars conclude in the paper "Economic and Technical Drivers of Technology Choice: Browsers."
The implications are significant. Browsers simplified access to the online world, transforming the Internet from a communications vehicle for academics into a mass consumer phenomenon. At the same time, the growing usefulness of the Internet drove sales of personal computers off the chart—the installed base of PCs doubled to 213 million computers between 1995 and 1999. Understanding the complex interaction between the two technologies and how a second mover was able to unseat the incumbent market champion will help innovators of all stripes learn how new technology gets diffused into mass markets.
In this interview, Yin discusses the results and implications for new browser upstarts such as Firefox and Camino. Do they stand a chance against Internet Explorer? Yin says Microsoft's entrenchment in corporate IT, the maturation of the PC market, and the technical difficulty many consumers have in switching to a new browser make it hard soil for new challengers to take root.
