Microsoft: Losing Market Share in a Non-Existent Browser Market?

Every month, the technical press religiously reports on the state of the browser market, and who or who isn’t losing market share. This is a recent example from Computerworld, but a variation of this article appears across the spectrum, and covers data from what Computerworld calls “metrics vendor Net Applications Inc.” During 2008, the press and the information technology (IT) analysts who were interviewed interpreted this data as proof that Microsoft (MSFT) is losing market share in the browser market.

From my admittedly Neanderthal information technology (IT) marketing background, I don’t see how you lose share in a market that does not exist. But perception being as important as reality in IT investment, I think it’s worth asking the question “Does losing market share in a market that does not exist matter?”

Basically, the browser market does not exist because browsers are free (as in beer, not speech). They are either standalone free or bundled “free” into other software. In addition, except for esoteric differences only a techno-nerd can love, browsers fundamentally do the same thing so it is unlikely that anyone is buying the software into which some browsers are bundled because of the browser. In other words, no one is buying or selling browsers and no is buying or selling something else because of browsers. Marketing 101: there is no browser market.

So what does Net Applications mean when it talks about share? What it is measuring is usage, not market share (since there is no market). There is also a question about Net Applications’ methodology because only its customers’ data is used. Its customer base seems highly skewed to ecommerce as compared to all sites in the universe. However, the sample size is very large and is probably representative of the universe. In addition, Net Applications only shows a couple of years’ data on its web site.

Does losing market-usage share in browsers matter? It would, but in a useful market-research view, going back a decade to look at such an old technology such as browsers; I would guess that Microsoft has not lost much market-usage share. I cannot find any confirmation but I believe that Firefox - currently number two in the Net Applications lineup at 20% to Internet Explorer's 70% - has simply replaced a portion of the former market-usage-leading share held by Netscape, Firefox’s predecessor. Netscape led before Microsoft’s browser had even been introduced. Certainly, my opinion is true if one were to compare the market usage statistics of Netscape vs. Microsoft browsers prior to 1999, before Net Applications was founded. For that data, go see the legal papers in U.S. Department of Justice vs. Microsoft.

So, what happened to Netscape means that losing market share in a market that does not exist does matter. But, this is only the case if the functionality being discussed is an important, ongoing factor in the market. Competitors have a long history of chasing Microsoft into markets it is milking for all it's worth as it is exiting that market. I would guess that browsers are such a market (or by my definition of markets, such functionality). If you want to see what Microsoft sees for human interaction by the middle of the next decade, look to its work in surface computing and the Xbox. By then, browsers will look to you like green screens look to this Neanderthal.

(P.S. In my opinion, Netscape lost the browser war because it lost a server software market battle with the Apache HTTP server, and not because of anything Microsoft did. But, that's a blog post I already wrote, sometime before I even knew what a blog post was.)

Comments

[Daniel Herkes:]

The browsers direct ad content based on who is paying to develop the browser. The Mozilla browser will not necessarily push it's users toward the same ad base that IE's will. Mozilla does not crash as much either.

Jan 05 06:57 AM

[Tradememe:]

If the browser market was not that important, Google would not have released Chrome.

Jan 05 07:29 AM

[Ishortyou:]

Not so sure if this cllicking business model gives a lot of security to investors. Microsoft is like a Dinosaur, failing to adapt quickly to new changes in the market and if it keeps itself that way it will go extinct, as simple as that, already is having problems.

Jan 05 07:41 AM

[Tom B:]

The miracle is that, with a browser as out-dated, inaccurate, and generally AWFUL as IE, so many people still use it. The reason they do is because it comes pre-installed on PC's, and "Joe Six-pack" PC users live in mortal dread of installing new apps on their PC's, unless absolutely necessary (like anti-virus software).

I don't know where GOOG is going with Chrome. There's no Mac version, so the browser is utterly unworthy of attention at this point, but the idea of treating each tab as a separate process is kind of cool. Will it be cooler than Firefox or Safari, though? Who knows?

Jan 05 08:54 AM

[Josh Thompson:]

"If the browser market was not that important, Google would not have released Chrome"

That does not make any sense, and it indicates that the meaning of this article went right past you.

Jan 05 10:59 AM

[Bozzo:]

Browsers do not direct anything, that's nonsense. They let you browse whatever you want and view/click on whichever ads you want to click on.

For all it's worth if everyone would be using Firefox to search through Live.com and browse MSN.com Microsoft would gladly lose all of it's share in browsers to Mozilla :o)

The reason why Microsoft is even bothered with the browser now is because it wants a decent predictable thin-client platform, for which it'll develop software.

Jan 05 01:56 PM

[kirasaw:]

Browsers don't matter? I use Safari and I see a box in the title bar that says Google mmmmm I bet Apple gets paid for that.

Jan 05 03:36 PM

[Hotcurry:]

Once in a while I read an article, which has been written by someone, clearly so clueless on the subject they are discussing that it is laughable, this is one of them.

Jan 05 06:48 PM

[flint:]

"... its work in surface computing and the Xbox." This is arguably true. But even this technology(and Apple's MultiTouch and Gestures functionality) is only half a step away from existing(human) interfaces.
The Holy Grail would surely encompass neural networking and Holographic Volumetric display where potentially limitless storage, retrieval and processing of information should be possible.

Looking forward, the immediate question is whether a punt on this 'next generation' Microsoft technology, is a worthy investment. My guess is no. I just don't think Microsoft in it's present form is capable of a 'great-enough' vision. The debacle over Yahoo indicates different struggles to ensure future market share functionality.

Jan 05 08:12 PM

[KenC:]

Wow, what a crock!

Microsoft is exiting browsers as others enter? This is a Microsoft habit? Why did MS follow Apple into the music player market, when the MP3 market was maturing? When will Microsoft follow Apple into the cellphone market?

Don't you realize that most people's only contact with MS is thru the browser? If it gives people a lousy experience, guess how people view MS? If it exits the browser market, guess how people perceive MS?

By the way, Net Applications has more than 2 years of data on their website. There's a little "left arrow" that allows you to go back further. I believe they go back to 2004. In October 2004, MSIE had 92.18%, and now they have 68.15%, a drop of 24%. While rationalizing that it's just Netscape's share that Firefox and others have gained, they seem to have fought alot harder to gain Netscape's share than given it up.

Jan 06 12:36 AM

[KenC:]

As for Surface and Xbox as where MS is going with interfaces, I guess the whole voice control is the future mantra that Bill Gates spouted for a decade went nowhere.

Jan 06 12:38 AM

[Tom B:]

"Don't you realize that most people's only contact with MS is thru the browser? If it gives people a lousy experience, guess how people view MS?"

Most people's contact with MSFT is through Windows, and it seems clear MSFT does not care how lousy the experience is, if Win3.x, Win95, Win 2000, WinXP, Vista and the execrable Win Mobile are any indication.


On Jan 06 12:36 AM KenC wrote:

> Wow, what a crock!
>
> Microsoft is exiting browsers as
others
> enter? This is a Microsoft habit? Why did MS follow Apple into
the
> music player market, when the MP3 market was maturing? When will
Microsoft
> follow Apple into the cellphone market?
>
> Don't you
realize
> that most people's only contact with MS is thru the browser? If
it
> gives people a lousy experience, guess how people view MS? If it
exits
> the browser market, guess how people perceive MS?
>
> By the
way,
> Net Applications has more than 2 years of data on their website.
There's
> a little "left arrow" that allows you to go back further. I
believe
> they go back to 2004. In October 2004, MSIE had 92.18%, and now
they
> have 68.15%, a drop of 24%. While rationalizing that it's just
Netscape's
> share that Firefox and others have gained, they seem to have
fought
> alot harder to gain Netscape's share than given it up.

Jan 06 09:43 AM

[Brian Bober:]

I agree that Netscape lost due to Apache as well as its lack of focus on web developers (Microsoft had DHTML, Netscape had basically nothing). And that usage should be discussed when listing market share. A large percentage of people use multiple browsers (I use three).

However, I think that the browser is extreme important. The browser will eventually fulfill Gates nightmare and turn the OS into primarily an interface for device drivers. Google must be concerned as well as search and other online services may eventually be dis-intermediate by browsers. The company that intermediates the web through its browser will yield significant power.

Jan 07 04:12 PM