Lisa Wambach, 1001403

Browser Diffusion
Between 1994 and 1999, Netscape and Microsoft were facing each other in a showdown which has
become known as the (first) “Browser Wars”. Both companies strived towards offering the most dominant
web-browser, in a time where the Internet was mainly used by techies and too complicated for the majority
markets. The Browser Wars set the stepping stones for the popularization of the Internet and ultimately
provided web-access to the mass market (Bresnahan and Yin 2005).

Network externalities and the Internet
Within a short time after Netscape launched its
browser Netscape Navigator, it was downloaded
by the majority of internet users at the time. A
positive network effect took off, initiating more
users to adopt to the browser. The value of the
Netscape Navigator increased by more users
downloading it. The release of the Navigator
marked the beginning of the Internet Mania, since
the browser allowed access to the Internet for the
mainstream markets. During this stage, Microsoft
had not yet developed a web browser and it
seemed likely that the Netscape Navigator was
Network effects, also called network externalities,
describe the beneficial effects of a growing
network (real, virtual, and social networks). The
more expanded a network is the more appealing it
is to its users (Shapiro and Varian 1999).
going to set the standard for browsers (Bresnahan
and Yin 2005). However, after Microsoft launched
its Internet Explorer (IE) and distributed it in
combination with its computers and software
packages, the tide had turned and IE took over the
majority of the market share.
Increasing diffusion
With the web browser being accessible not only to
techies, but to the average customer, the
phenomenon of Internet usage spread rapidly. First
mainly used in universities, online information and
e-commerce grew, making the Internet more
attractive for other users, beyond educational
institutions. Internet Service Providers, as well as
Webmaster saw the early heydays of the web
development and provided services dedicated to
mainly the Internet Explorer (Bresnahan and Yin
2005).
The use of the Internet increased the appeal of
PCs, offering email, chats and e-commerce.
Microsoft's distribution strategy of selling IE in
combination with PCs turned out to be highly
successful. Especially with regards to the fact that
IE 1, released in 1995, was only compatible with

Figure 1!! ! ! ! Source: wired.com

 Lisa Wambach, 1001403

Windows 95, consumers were likely to buy new Recent development

hardware, providing them with the most efficient
system to browse the Internet. With the increasing
usage of IE 1 and soon thereafter IE 2 (1996)
Critical mass defines the state when enough
people participate in a network, or accept an
innovation to make the further growth self-
sustaining (Rogers 1995).
Today, IE is facing different competition, mainly
from Firefox, Safari and Chrome. As in September
2010, Internet Explorer owned a market share of
less than 50% 1, the first time since it outran the
Navigator. Microsoft is loosing its share mainly to
Google Chrome which has seen a rapid growth
since its release in Q3 2008.

website developers made use of the related

protocols, rather than those for Netscape’s
Navigator (Bresnahan and Yin 2005).

Regardless of Netscape’s attempts to stay ahead

and despite an anti-trust case that was filed
against Microsoft, IE gained critical mass and
reached a tipping point in late 1997. (see figure 1)

The tipping point describes the moment when

critical mass is reached and the network or
innovation goes mainstream and builds itself
(Shapiro and Varian 1999; Shapiro 2003).
Since then, the Internet Explorer is the leading web
browser, reaching an astonishing 95% market
share in 2004, according to TheCounter.com
(although measurements vary). The industry
adopted several protocols and add-ons that are
tailor-made for IE and do not run on other
browsers, making it the most attractive at times.
Figure 2
! Source: Daniel Cardenas, Wikimedia
Another threat IE, together with all web
browsers, is facing, are apps used on mobile
devices such as the iPhone, iPod, Blackberry and
iPad. Users view most of their web content
through dedicated applications and do not need
web browsers anymore to access their emails,
social networks, news or music. (Anderson
September 2010).

1Depending on whether the shares are calculated based on the user agent, or the page request, different
market shares are distributed. Some agencies (NetApplications, StatOwl) give IE a market share higher than
50%, whereas others below 50% (W3Counter, StatCounter, Clicky, Wikimedia). For an overview of the
differently calculated market share of September 2010 check http://en.wikipedia.org/wiki/
Usage_share_of_web_browsers.
 Lisa Wambach, 1001403

Bibliography
Anderson, C. (September 2010). The Web Is Dead. Long Live the Internet. Wired Magazine, Condé Nast.
Bresnahan, T. F. and P.-L. Yin (2005). "Economic and Technical Drivers of Technology Choice: Browsers."
Harvard Business Review.
Rogers, E. M. (1995). Diffusion of Innovations. New York, The Free Press, A Division of Simon & Schuster
Inc.
Shapiro, A. (2003). Creating Contagious Commitment - Applying the Tipping Point to Organizational Change.
Hillsborough, North Carolina, Strategy Perspective.
Shapiro, C. and H. R. Varian (1999). Information Rules: a strategic guide to the network economy, Harvard
Business School Press.