Microsoft and Netscape Competition

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Table of Contents

Introduction
Effectiveness of the Strategies
Conclusion

Introduction

For organizations to be competitive in the current global economies, they are required to put in place certain measures and strategies. In a single industry, the industry players are in constant competition. Only effective strategizing is known to influence the outcome of this competition.

This essay discusses the competition of two companies in the same industry for the same internet deal. The paper focuses on the strategies they have put in place. The case involves competition between two of the leading computer and internet companies in the world, namely Microsoft and Netscape. These companies enter complex negotiations in an attempt to win the contract by two organizations, which are America On-Line (AOL) and KMPG.

Effectiveness of the Strategies

Microsoft and AOL Deal

The strategies put in place in the negotiations between AOL and Netscape were initially ineffective. In the beginning, AOL was inclined towards the services of Netscape based on the opportunities that the two companies could develop if they worked together. AOL’s management viewed Microsoft as a common enemy. Therefore, it (AOL) wanted to award the contract to Netscape to counter Microsoft and/or prevent its further growth and expansion.

Poor strategies on the side of Netscape can be witnessed in the making of this offer. The company’s executives knew that AOL would get them to use their services. However, they were slow in engaging AOL seriously. Engineers in Netscape were not keen on the deal that was pending. Instead, they initially opted to work on other opportunities. Netscape failed to strategize and/or tag stringent measures on any possible partnerships between it and AOL, thus making the company reconsider its interests.

Microsoft had a number of reasons that the deal between it and AOL would not be possible. However, it approached the negotiations with confidence, but from the losing side. AOL was known to be in partnership with some of Microsoft’s competitors. This strategy was enough to make the deal hard to enter.

Eventually, a deal was sealed between AOL and Netscape as many had expected, although there was a positive reaction from the markets of these companies. However, Microsoft put in strategies to ensure that it had a deal with AOL that was far better than the one between AOL and Netscape. It gave AOL a far better deal where its (AOL) clients would access services better, thus making the company more visible on the internet. A number of benefits would also be enjoyed between Microsoft and AOL in the new deal.

Microsoft’s strategies were effective in winning the deal with AOL. The company decided to remain patient with the deal even after negotiating the agreements between AOL and Netscape. These strategies ensured that the company managed to win the better part of the deal, as opposed to Netscape that worked with the surety of winning from the start. It thought that it had no major competitors since all factors had been working in its favor.

KPMG-Netscape Deal

In this second competition platform, Microsoft’s strategies were not enough to ensure that it wins the deal with KPMG. Some of the things that worked against it include the expensive changes that KPMG would have to make in its (Microsoft) operations to ensure that was the leading platform in the industry.

If Microsoft were to win the deal, KPMG would have had to upgrade its software. This situation would have been expensive in the end. The strategy that Netscape used to ensure it won the deal against Microsoft included the willingness that it had demonstrated in supporting the existing KPMG infrastructure.

The deal between the two companies had a number of benefits for Netscape. For instance, it would benefit in the competition against Microsoft. The company’s browser sold thousands of copies after the deal. This amount was more than what Microsoft had sold.

The deal also contributed to the expansion of the company internationally through the introduction of the browser that was run by KPMG on the global front. This shows that the strategy applied by Netscape to win the deal with KMPG was efficient since worked in its favor. On the other hand, the strategies put in place by Microsoft were not effective, and hence the reason behind its loss of the deal.

Microsoft was unable to provide a match against Netscape in the bit of the deal with KPMG. One way in which it was unable to achieve this goal is through the retention of the charges that would have taken effect once the deal between the two was struck. In addition, Microsoft managers and sales representatives seeking to win the deal between Microsoft and KPMG were unable to assure KPMG of the profitability of the deal.

The strategies it put were not sufficient to counter the offer made by Netscape. While Netscape offered to lower its standards to accept the new deal, Microsoft was not willing to ensure adequate capacity to host the new organization. The strategy used by Netscape was based on the calculation of the total value of the deal between its company and KMPG. Although downgrading Netscape’s software would cost it in the technological capacity, the result of hosting KMPD was such that it would cancel out this effect.

The strategy worked. Hence, Netscape was able to market itself using the new platform to thousands of people. In a year, the deal was worth Billions, with Microsoft only being left to reconsider the decision in terms of why the strategies it put in place did not work. Some of the other strategies that did not work for Microsoft include the refusal to allow a downgrade of its capabilities. The introduction of an intranet in KMPG’s operation meant that only the organization and its clients would use the new system.

To Microsoft, this issue was not adequate to allow a downgrade of its software to allow PPMG to use Microsoft to deliver services. The executives at Microsoft did not know of the strategies being put in place by Netscape to ensure that it wins the deal. Should Microsoft have won this particular contract as it won the first one, it would have increased its market domination over Netscape through the addition of new clients along KPMG’s intranet.

Conclusion

Both Microsoft and Netscape made their presentation to AOL so that the company can decide who wins the contract of providing them with a browser for their online services. The negotiations were dramatic. An initial deal made between AOL and Netscape was only overturned after a day, with Microsoft taking the day. The two companies, Microsoft and Netscape, intensified competition after the incident.

A year later, they met again in another intense competition. In this second competition, Microsoft and Netscape are competing to win a contract with KMPG. This second competition for a contract between the two companies was as intense as that for an AOL contract. After intense competition from Microsoft, Netscape wins the battle. The whole scenario can be explained in terms of the business strategies that the two companies were able to put in place to win the deals as discussed in the paper.

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Microsoft and Netscape Competition

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