As gatekeepers to the Internet, browsers play a key role in the battle for online dominance. Browsers enable us to access Web sites. They control how Web pages are displayed. They can set search engine defaults. Google, for example, pays to be the default search engine on Firefox, Safari and Opera browsers. Meanwhile, Microsoft’s Bing search engine is defaulted on both Yahoo! and its own Internet Explorer browsers. If left unchanged by users, defaulted search engines gain an edge in Web traffic, and consequently, advertising revenues. This is because companies pay search engines to have their ads displayed next to search results, and also pay when users click on them.
And as technology improves, so do the possibilities. Now, browsers are faster and more powerful than ever, and are able to integrate an increasing number of “plug-ins” and run third-party apps. Users get more features and online productivity tools, while companies and developers get a platform to promote and distribute their products. In fact, there’s widespread belief in the industry that soon, all users will really need is a basic operating system and a powerful Web browser. Then, they can access all their data, run software and do all their computing activities online, diminishing the need for expensive, software-laden or resource-intensive computers. It’s called “cloud computing.”
“Many, many applications can be delivered through the browser and what that does for our costs is stunning,” said VP of Google Engineering Vic Gundotra at the recent MobileBeat conference in San Francisco. “We believe the Web has won and over the next several years, the browser, for economic reasons almost, will become the platform that matters and certainly that’s where Google is investing.”
Google recently announced that they are launching a Google Chrome operating system (OS) as a companion to their existing Google Chrome browser. The OS will be opened up to developers later this year. It will initially be targeted to netbooks (which are basic, inexpensive laptops) and will be made available to consumers in the second half of 2010.
Google, however, is not the only company planning to capitalize on the Web browser’s developing role as hub of all user activity. Microsoft’s research unit released a paper earlier this year on a project it calls “Gazelle.” The paper describes Gazelle as a secure browser that would act like the Windows operating system, ensuring that different Web applications run in separate processes. This ensures that the Web applications are protected from each other in cases of failure, even if they are run within the same site. While Gazelle is not yet under implementation, Microsoft researcher Helen Wang tells CNET News: "We’re really trying to leverage the decades of operating system experience and apply that in the Web and browser setting."
Other competitors are also lining up. Marc Andreessen, founder of Netscape (one of the first browsers and largely credited to have popularized the Internet), is reportedly backing start-up RockMelt. Andreessen tells The New York Times that RockMelt is developing a browser that would keep pace with the evolution of the Web. Exactly how is unclear, as little detail has been released.
As the industry moves toward power browsers and Web-centric operating systems, however, a number of questions crop up. How will this affect the digital media value chain? Will these lightweight operating systems (such as Google Chrome and Gazelle) actually end up replacing or outdating their traditional, more powerful — and more expensive —counterparts (such as Windows OS or Mac OS)? Will developers, device manufacturers and retailers support the movement enough to make it work? Perhaps most importantly, will consumers be convinced enough to make the switch? What about security and privacy issues? These questions need to be addressed, and many hurdles still need to be overcome before anyone can say who will win the browser war, or even what the battlefield will end up looking like.
Microsoft and Nokia have teamed-up to offer Microsoft Office software on Nokia’s E-series phones, and eventually on other handsets, starting in 2010. Technically, both compete in the smartphone market with their separate operating systems for mobile devices. Microsoft has its Windows Mobile platform, while Nokia has its Symbian sytems. So why join forces now? Because both are using the move to defend their lead on different fronts.
Nokia’s fight: smartphone dominance. "This is really about creating a formidable challenge for RIM," said Nokia EVP for Devices Kai Öistämö at the official press conference. He’s referring to BlackBerry-maker Research in Motion, which holds 18.7 percent of the smartphone market, according to technology research firm Gartner.
While that’s less than Nokia’s 45 percent market share, the BlackBerry is seen as being favored by businesses, largely due to its emailing and productivity features. In fact, a recent survey of 300 high-end users by investment firm Goldman Sachs (as reported by tech publication ZDNet) found that 57 percent of respondents owned BlackBerries. Of those, 32 percent were subsidized by their companies. By offering Office software on its phones, Nokia hopes to appeal to more business users.
RIM, however, is not the only challenger to Nokia. Gartner also reports that iPhone 3G S sales are a big factor. iPhone sales were the most impressive out of all the smartphones launched in the 2nd quarter of 2009, including Nokia’s N97. It also says Apple had the biggest market share growth in the past year, from 2.8 to 13.3 percent.
Some industry analysts attribute this success to the iPhone App Store, among other factors (see our previous post on App Stores). Indeed, telecoms analyst firm Juniper Research predicts mobile app downloads will approach almost 20 billion per year by 2014. To compete, Nokia launched its own app store, the Ovi Store, in May. The store’s selection, however, is still sparse. The addition of Office software could give Nokia phones the boost it needs among users seeking productivity apps. BlackBerry too has launched its own App Store.
Microsoft’s fight: dominance in communications software. Microsoft Business Division President Stephen Elop says the partnership is part of a strategy to “provide the best productivity experience across the PC, phone and browser.”
Microsoft’s Business Division, which includes Office, has recently reported declining revenues. As Office is a top moneymaker for the company after Windows OS, a lot rides on its continued success. Office, however, faces increased heat from competitors like Google’s free, Web-based productivity apps. “Google's initiative is forcing Microsoft to change its business model,” said Sandeep Aggerwal of the financial advisory group Collins Stewart, in a Dow Jones Newswire interview.
Indeed, Microsoft appears to be covering its bases while it can. Back in July, the company also announced plans to launch free Office Web apps in 2010. Gene Munster, analyst at investment firm Piper Jaffray, thinks it’s a wise move. In an interview with The Wall Street Journal, Munster says making sure people are still using Microsoft products is more important in the short term than risking revenue.
If David can’t knock down Goliath, what does he do? He joins forces with the next biggest thing. That’s exactly what Bing (Microsoft’s new search engine) did, when it struck a deal with Yahoo!, currently ranked #2 worldwide, after Google.
A recent study by online advertising network Chitika found that, across its network, Bing users are over 50 percent more likely than Google users to click on Bing ads.
Microsoft prefers to call Bing a “decision engine,” not a “search engine,” touting that it analyzes the content of Web pages and delivers better results in four main categories: shopping, travel, health and local searches.
Basically, Bing will be the default search engine on Yahoo! for the next 10 years, while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. The deal is still subject to regulatory review, and both companies expect it to close by early 2010.
“Success in search requires both innovation and scale,” says Microsoft CEO Steve Ballmer. “With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness.”
For now, that “scale” is still far behind Google’s. June data from comScore shows that together, Yahoo! and Microsoft command about 28 percent of the online search market, while Google holds 65 percent. Even if the new team succeeds in bringing troubled AOL into its mix — AOL’s search-engine partnership with Google is up for renewal next December — that will only add an additional 3 percent.
Google — whose name has become synonymous with “search” — doesn’t seem to be worried about the competition. And indeed, the battle to be the #1 portal for Web users goes well beyond search capabilities. Google still may have “a few tricks up its sleeve,” including the much-anticipated Google Wave. New partners Yahoo! and Microsoft are amping up their own weapons. Yahoo!, for example, has revamped its homepage and will be providing photo sharing features on Yahoo! Mail through Xoopit.
But the two companies are hardly merging. “This agreement does not cover each company’s web properties and products,” Yahoo! and Microsoft said in its joint press release. “In those areas, [we] will continue to compete vigorously.”
