By Tim Landgrave

Microsoft and AOL reached an agreement last week in which Microsoft paid AOL $750M and AOL agreed to use and interoperate with key Microsoft technologies. This agreement also signifies the end of a long battle between a startup and a software giant for control of the user interface for the Internet. I’ll look at the history of the Netscape vs. Microsoft battle and the implications for corporate planners now that Microsoft has emerged victorious.

The battle for the desktop
To the casual observer, the battle to become the de facto browser was about which piece of software would allow users to access Web sites. But to Netscape and Microsoft, it was much more than that. When Marc Andreeson and Jim Barksdale started Netscape in the early 90s, their initial goal was to create an easy-to-use interface that would allow computer users on any platform to access content on the Web. For the first few years, they had little or no competition. In fact, when Microsoft belatedly entered the browser market in 1995, its first incarnation of Internet Explorer was nothing more than a repackaged, down-level version of the same technology on which Netscape was based. Netscape had a clear lead in the market and was releasing new versions that allowed developers to take advantage of enhancements in HTML as soon as they were released.

Netscape also had a problem. Like many other Internet companies, it made the faulty assumption that you could give away technology to build a market and then generate revenues on usage through advertising or by creating other products on which your product depended. Although it created server-based products that worked with its browser and a branded portal ( through which it funneled users, it was never able to build a large enough revenue stream to make the browser a primary source of revenue.

As Netscape became not only the dominant Windows browser but also the dominant cross-platform browser, the company began planning to extend its model to become more than just the browser. In fact, Marc Andreeson made the bold prediction that one day Netscape would replace Windows as the default user interface. His prediction wasn’t far off. If Netscape could run on all platforms and all applications became Web applications, Windows would be irrelevant. In fact, Netscape could become the default shell for any operating system including Windows and any derivative of UNIX. Unfortunately for Netscape, Microsoft came to the same conclusion.

Why Microsoft won the battle
When faced with the prospect of a major competitor becoming the default UI shell for its customers, Microsoft had to respond and do so quickly. If Netscape’s position was to make the operating system irrelevant, Microsoft’s position was to make the browser irrelevant. Making the browser “just another operating system feature” involved creating tight ties between the browser and the operating system. But since Microsoft could only create these ties for its own operating systems, one of the first things it had to do was stop releasing versions of IE for other platforms. Next, it created mechanisms for the OS and the browser to interact at a more direct level. To users, these features became known as ActiveX features. With the Active Desktop, users could place views of Web sites (news, weather, or internal sites) on their desktops and navigate the desktop like a browser. ActiveX controls allowed developers to create rich Web applications which downloaded controls that could use OS features directly, giving them a richer surface to program against than the sandboxed Java client controls.

But this richness came with a price. It meant that the security of the desktop could easily be compromised with versions of the OS that had no differentiation between the permissions granted to code loading locally with the user’s permissions vs. code loading from external sources that should be granted more restrictive permissions. It’s security issues like these that have plagued Microsoft’s operating systems for years. But in spite of these security issues, it was the ability to create a richer user experience by integrating the browser into the operating system that led AOL to come to the conclusion that it needed to use this technology for its online service customers. What makes this conclusion even more startling is that AOL acquired Netscape a few years ago in hopes of making it its key browser technology.

Corporate aftershocks
The AOL decision will send aftershocks through many corporations. Although corporate use of Netscape has gone from a high of 90 percent in its heyday to less than 10 percent today, the view of the browser as a separate piece of software has never really changed. Companies have been reluctant to build software that relied on features specific to IE even if it meant they could build richer software. They were concerned about the ability for external users to access their sites if they used IE-specific features. With AOL moving to IE wholesale, corporate developers now have a richer canvas on which to create their applications.

This suit also clears Microsoft’s final impediment to finally making IE a first-class feature of the operating system rather than an add-on. The only significant desktop-based legal hurdle for Microsoft is the two states that didn’t sign on to the Justice Department settlement, but it’s unlikely they’ll be able to overturn the federal government’s settlement. This means that Microsoft has been cleared to make IE the browser of choice for Windows computing. Ironically, it also means that Microsoft will probably stop considering it a different product and simply start releasing it as part of a new operating system release. Why? Because the only way to eliminate the inherent security flaws in a browser tied to the operating system is to replace it with browser technology that’s integrated into the fabric of the operating system, including its security mechanisms. Although we may see an interim release before Longhorn, after Longhorn, I don’t expect to see any future releases of standalone IE for prior versions of Microsoft Windows. (In fact, a Microsoft product manager has already admitted as much.)

The end of the AOL suit also means that Windows Media Player will become the default audio and video player and its Digital Rights Management features will allow corporations to distribute these media assets with confidence that their copyrights can be protected. And I think we’ll finally see real interoperability between AOL’s Instant Messaging and Microsoft Instant Messaging as a result of this settlement.

What about Netscape?
I believe that Netscape’s future will be as the default Linux browser. Although other browsers like Opera will continue to operate cross-platform, the logical future for Netscape is for the Linux community to embrace the Netscape Mozilla initiative and give their OS a rich browser experience based on that code base. Unless corporations move en masse to Linux desktops, the Netscape browser technology will go down in the history books as another failed attempt to wrest control of the desktop from Microsoft.