Browser Wars II: The Release of IE 7 (BETA 2)

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Case Details:

Case Code : MKTG138
Case Length : 17 Pages
Period : 2004-2006
Organization : Microsoft Corporation
Pub Date : 2006
Teaching Note : Available
Countries : Global
Industry : Computers, IT & ITeS

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The Release Of IE 7 Beta 2

On February 15, 2005, Microsoft's Chairman, Bill Gates announced a proposal to release a new version of IE browser to be called IE 7. The new web browser was proposed to counter competition from Firefox and address the severe security problems that affect IE6.

Gene Munster, an analyst said "The big point is that IE's been losing market share to Mozilla's Firefox." He added, "Now Microsoft is trying to catch up and regain user loyalty from people who have embraced Firefox's simple and more secure format."

Microsoft released a pre-IE 7 Beta 2 Preview on March 20, 2006 as a test version for users and another version, IE 7 Beta 2 was released on April 25, 2006. With the release of IE 7 Beta 2, Microsoft had increased the security features of its web browser considerably.

Microsoft's security response team said, "We have been trying to get this fix into the next IE release, but it's been a lot of work to do that, as it's relatively late in the cycle. It looks like it will make it in though."

The Search Wars

The release of the Beta 2 version of IE 7 had intensified the war between Microsoft and Google. Microsoft had integrated its Internet search service, MSN Search as the default search engine in IE7. Google alleged that Microsoft's move would give it an unfair advantage in the online search market. The search-based advertising market was worth US$ 10 billion in 2005 and search-based advertising was Google's primary revenue generating business. Google complained to the DOJ and EC that Microsoft's move was monopolistic and anti-competitive...

The Outlook

Microsoft acquired three security companies in order to improve the security features of its products. On February 8, 2006, Microsoft acquired Sybari software, a company that developed software that filtered viruses and spyware. Security software firms GeCAD and Giant Software were also bought to bundle anti-spyware software with the browser. With these acquisitions Microsoft aimed at handling all the issues related to security and counter the growing threat from Firefox.


Exhibit I: Brief Profile of Microsoft and its Products
Exhibit II: Earlier Versions of Firefox (As of June 2006)
Exhibit III: Features of IE 7
Exhibit IV: Brief Profile of Google


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