Browser Wars II: The Release of IE 7 (BETA 2)

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Case Details:

Case Code : MKTG138
Case Length : 17 Pages
Period : 2004-2006
Organization : Microsoft Corporation
Pub Date : 2006
Teaching Note : Available
Countries : Global
Industry : Computers, IT & ITeS

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"I think IE 7 brings the browser to parity with Firefox in terms of features, and the security's a big improvement over IE 6. I think it will be good enough to stop some of IE's market share loss to Firefox, and perhaps bring some switchers back to IE." ¹

- Matt Rosoff, Analyst with Directions on Microsoft,² in April 2006.

"There's a big chance right now to switch people to Firefox and it might not last very long-- Microsoft has a new version of Internet Explorer on the way and lord knows what they'll be doing in Vista to force people to use it. Firefox has to get a big foothold right now." ³

- A Group of Firefox Advocates, Massachusetts, in April 2006.

Microsoft's New Browser

On April 25, 2006, Microsoft Corporation (Microsoft), the world's largest software company, released a new Beta version of its Internet Explorer⁴ (IE) web browser, IE 7 Beta 2 (IE 7). The browser offered tighter security control when compared to previous versions and offered advanced features to navigate the Web.

It allowed users to open more than one site in one browser window, and provided support for RSS⁵ feeds that could be incorporated in the page design. Color coded warnings were also provided in case the user accessed a website that was suspicious or known to be fraudulent.

The browser development team at Microsoft considered IE 7 to be a significant improvement over the IE 6 version. "IE 7 is feature complete and has been through significant compatibility and reliability testing. People (especially technology enthusiasts) will have a good experience with it,"⁶ the team added. Experts were of the opinion that Microsoft's new browser was the company's response to growing criticism that its IE 6 browser had serious security flaws, which made users vulnerable to attacks from malicious viruses and online phishing⁷ scams.

In January 2005, Secunia, a Denmark-based computer security company, which tracks vulnerabilities in over 9,000 software products, had given the IE 6 their highest rating of "extremely critical" because of the high number of flaws detected in the browser.

Microsoft's decision to revamp the browser was also seen as a response to the growing threat from rival browser, Firefox, an open source ⁸ browser, officially released in November 2004 by the Mozilla Foundation.⁹

Microsoft had earlier released two test versions of its IE 7 browser named "Internet Explorer 7 Beta 2 Preview" in February 2006 and March 2006. The final version of IE 7 is expected to be released in the latter part of 2006 and to be included in Windows Vista, Microsoft's new operating system scheduled for release at the end of 2007 (Refer to Exhibit I for a brief profile of Microsoft and its products).

Analysts also felt that the IE 7 had further increased the rivalry between Microsoft and Google Inc.¹⁰ (Google), as Microsoft integrated its Internet search service, MSN Search as the default search engine in the browser. Google described the move as monopolistic and anti-competitive. The move was seen as a severe threat to Google as it could hamper its online search advertising business in a market worth over US$ 10 billion (in 2005). Google filed a complaint with the Department of Justice¹¹ (DOJ) in the US and European Commission¹² (EU) in Europe in May 2006. The DOJ ruled out Google's objections in the same month.

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1] Foley, Mary Jo. "Microsoft Refreshes, Broadens IE 7 beta," www.microsoft-watch.com, April 25, 2006.

2] Directions on Microsoft is an independent organization that tracks the products, strategies, and marketing initiatives of the Microsoft Corporation.

3] Beer, Stan. "Firefox Zealots Offer Websites Money to Switch users from IE," www.itwire.com, April 26, 2006.

4] Internet explorer is the leading web browser with a market share of 85% as on March, 2006.

5] RSS is an acronym for Rich Site Summary or Really Simple Syndication. It is a system that generates automated feeds such as weblogs or news, specified in XML language.

6] "Microsoft Expands Browser Testing," www.bbc.co.uk, April 25, 2006.

7] Phishing is characterized by attempts to fraudulently acquire sensitive information, such as passwords and credit card details, by masquerading as a trustworthy person or business in an apparently official electronic communication. (Source: www.wikipedia.org).

8] Open source software is computer software available with source code.

9] Mozilla Foundation was formed by Netscape, a former browser, in 1998.

10] Google Inc., was co-founded by Sergey Brin and Larry Page in 1998. Google is the world's most popular Internet search engine and has a diversified range of products such as E-mail, blogs, etc.

11] Established in 1870, the US Department of Justice (DOJ) enforces the law and protects the interests of the US. It ensures safety against foreign and domestic threats and seeks to punish the guilty ensuring fair and impartial administration of justice to US citizens. The divisions of the DOJ are the Antitrust Division, the Civil Division, the Civil Rights Division, the National Security Division, Criminal Division, the Environment and Natural Resources Division, the Justice Management Division, and the Tax Division.

12] European Commission is the executive body of the member countries of the European Union. Its main function is to propose and implement legislations, and also act as guardian of the treaties signed by European Union.


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