The New York Times
November 5, 1998
Memos About Browser Pose Challenge to Microsoft's Defense
By STEVE LOHR
WASHINGTON -- As late as last year, the Microsoft Corporation was so worried about the Netscape Communications Corporation's lead in Internet software that its senior executives wanted to delay an upgrade of Microsoft's Windows operating system to gain an edge in the browser battle, according to internal Microsoft documents released this week by the Government.
The linchpin of Microsoft's defense in its antitrust trial is that its Internet Explorer, or I.E., browser is a seamless feature of Windows -- not, as the Government contends, a separate product bundled with Windows in an effort to give it an unfair advantage against Netscape. The origins of its product strategy, Microsoft asserts, date back more than four years to a meeting of its executives in April 1994.
But internal Microsoft electronic-mail messages released this week by the Justice Department seem to cast doubt on these defense arguments.
Microsoft, however, argues that the e-mail mostly supports its legal case. "It shows that they regarded browsing functionality as part of Windows and were willing to delay an upgrade schedule to deliver a superior product," said Mark Murray, a Microsoft spokesman.
Still, an e-mail exchange between two senior Microsoft executives in January 1997 -- more than a year after the company first introduced its software for browsing the World Wide Web -- talks of competing with Netscape as "pitting browser against browser" and refers to "browser market share as job 1."
The exchange suggests that at that late date, within Microsoft, the browser and the operating system were not viewed as a single, seamless product.
In an e-mail on Jan. 2, 1997 , James Allchin, a Microsoft senior vice president, writes to Paul Maritz, a group vice president and the most senior Microsoft executive scheduled to appear as a witness in the trial, "I do not feel that we are going to win on our current path." Later, he adds, "I am convinced we have to use Windows -- this is the one thing they don't have."
In response, Allchin urges Maritz, "If you agree that Windows is a huge asset, then it follows quickly that we are not investing sufficiently in finding ways to tie IE and Windows together."
The more tightly Internet Explorer can be entwined in the next upgrade of Windows, Allchin writes, "the more Netscape will be cut off."
Defeating Netscape, the e-mail suggests, was such a priority at Microsoft that it was seen to outweigh the impact a delay of Windows would have on the computer industry. Sales of new personal computers, hardware add-ons and software all typically surge in the wake of an upgrade of Windows, part of the central nervous system that controls more than 90 percent of personal computers sold today.
Delaying Windows to embed the browser, is "the only thing that makes sense even if O.E.M.'s suffer," Allchin wrote, referring to "original equipment manufacturers," jargon for computer makers.
Maritz shared that view.
In a response on the same day, he wrote that he saw "little option" but to fully integrate the browser in the operating system, "even if it means missing the O.E.M. window" -- the delivery time frame that would allow computer makers to install the upgrade on machines for the 1997 year-end sales season.
Microsoft's Windows upgrade, code-named Memphis, was initially scheduled to be released in August or September 1997. But its arrival was delayed until June of this year, and it is called Windows 98.
In early 1997, Microsoft started hinting to software developers and analysts at industry conferences that Memphis might be delayed.
"It was never the reason given in public, but industry insiders believed that the real reason Memphis was being delayed was to totally integrate the browser and help Microsoft in its life-and-death battle with Netscape," said Richard Doherty, president of Envisioneering, a research firm in Seaford, N.Y. "This e-mail does seem to be proof of what Microsoft's intentions were back then."
Memphis was delayed even more than Microsoft had thought in early 1997, partly as a result of Microsoft's $425 million purchase in April 1997 of Web TV Networks, an Internet-via-television service. Afterward, Microsoft also decided to include Web TV software in Memphis.
Internet Explorer is fully embedded in Windows 98, but the company released a stand-alone version of its browser, Internet Explorer 4.0, in October 1997.
In its defense, Microsoft has also said that it became company policy after a meeting in April 1994 to "make a big bet on the Internet." Though few concrete plans were made that day, Microsoft says, there was agreement that Windows should have built-in access to the Internet, which eventually became its browser strategy.
The meeting occurred a couple of days after Netscape was founded and suggests, Microsoft says, that its main intention in the browser battle was to improve its operating system -- not to crush Netscape, as the Justice Department contends.
Yet in an e-mail written on June 10, 1994, Steven Sinofsky, a Microsoft executive who helped organize the April meeting, portrays a company ambivalent about the Internet and not yet planning a browser of its own.
"I must admit," Sinofsky writes, "that the thought of 'Internet evangelism' is a little like evangelizing water to Noah."
He describes the Microsoft message for Windows 95 as "all the plumbing you need to connect to the Internet," mostly software protocols for communicating on the network.
Later, Sinofsky wrote, "We do not currently plan on any other client software, especially something like Mosaic." Mosaic was the name of the browser developed by the programmers at the University of Illinois, most of whom went on to help found Netscape. Even so, Sinofsky added that Microsoft was "investigating possibilities."