Double Dealmaking in the Browser Wars Case Study

Case Study – Double Dealmaking in the Browser Wars

1. What was the deal landscape (please give brief overview as you see it) between Netscape, AOL and Microsoft at the outset?  What assumptions did Netscape make about potential customer AOL and competitor Microsoft?  How did it impact results?

In 1994, with the tremendous growth of subscribers, AOL faced a transformation of the business model, and it was willing to increase the browser to provide better customers with content services. AOL subsequently bought BookLink Technologies, a company manufacturing the mid-range browser, and was in urgent need of the cutting edge browser because of its lack of financial resources and programming expertise. AOL originally thought Navigator was the most appropriate choice, and Microsoft, as the most dangerous rival of Netscape, wanted AOL to use its own browser. AOL's CEO is Netscape's supporter, who was against Microsoft because there was a strong competition between AOL and Microsoft's MSN. As for the assumptions of Netscape, on the one hand, it considered its own technology as the best and AOL's technology as outdated, so for Netscape, the alliance with AOL was unattractive; On the other hand, it believed that the relation between AOL and Microsoft's MSN was very tense, and its products occupied 75 % or more of the market. In this case, AOL had to pay for the cooperation. This error in judgment led Netscape to refuse the alliance with AOL, and eventually only agreed on AOL use its browser with payment.

1. How did each of the parties (Netscape, AOL and Microsoft) see their interests? Narrowly/limited? or broadly?  How did each position themselves and what happened as a result?

Netscape saw its interests narrowly, since it only took into account that it can make money from AOL's deal to maintain the financial health, but left out the cooperation with AOL which can enhance its core competitiveness, so to prevent IE. AOL saw limited its interests. Due to the rapid growth of users and for the sake of time, AOL only took into account the significance of the strategic transformation brought by the full integration of the browser into AOL's software, without thinking that Microsoft with which has a competitive relationship will limit its own development and growth. Meanwhile, Microsoft broadly saw its interests. On the one hand, it saw the cooperation with AOL will not only bitterly against its competitors, and earned the market share, but also can get the huge amount of subscribers of AOL as well as control the competition development between AOL and MSN; On the other hand, it also clearly realized the despair needs of AOL.

Netscape positioned itself as the winner. It considered itself having a technical advantage and market share, and the competitor Microsoft having technical defects. AOL positioned itself as being duplicitous, it would choose the one which can meet its requirements. Microsoft positioned itself as the spoiler, it will be at all costs destroy the cooperation between its competitor and AOL. Eventually, AOL agreed to pay Netscape and had a limited cooperation, and Netscape which thought itself as the winner actually failed; Microsoft and AOL have reached a closer alliance. AOL for free used Microsoft's browser and set it "Default" while Microsoft also received subscribers resources of AOL.