Two major PC manufacturers, NEC and Gateway 2000, have broken ranks with Microsoft by quietly allowing certain customers to configure computers with Netscape Communications' Navigator on Windows 98 machines and are planning larger-scale programs to make Navigator more accessible to all their customers.
Microsoft has allegedly used its overwhelming dominance in PC operating systems to compel PC makers to install its Internet Explorer Web browser to the exclusion of Netscape, according to state and federal antitrust lawsuits filed earlier this week. Indeed, many of the major manufacturers offer only IE as a browser to their customers.
HP, which offers only Netscape on its Kayak workstation line, is "reevaluating and giving some serious consideration," to using Navigator throughout its line of PCs and notebooks, according to company sources. "There are discussions throughout HP about this opportunity and everyone has given it some serious consideration," one source said.
In Japan, Sony and Fujitsu are the only major PC makers which install Navigator in machines destined for retail stores, according to Japanese business daily Nihon Keizai Shimbun. Hitachi will consider installing Navigator if customers demand the product, and Toshiba said it will make a decision based on competitors' moves.
At CompUSA stores in the San Francisco Bay area, only a few of the top-tier vendors offer consumer models with Navigator, with the preponderance of systems coming with IE only.
"If you are a PC vendor, are you going to risk your relationship with the OS [and Microsoft]?" Peter Jackson, president and CEO of systems integration firm Intraware, asked rhetorically. PC makers "are dealing with fractional margins to begin with, so are they going to go out on a limb and anger Redmond?" he added, referring to the Redmond, Washington-based company.
In depositions taken a few weeks ago, NEC and Gateway executives testified that in certain instances they have already taken advantage of a stipulation between the DOJ and Microsoft allowing PC makers the option of removing IE from Windows 95, and are interested in removing IE in Windows 98 when requested by customers. The testimony is cited in the Justice Department's motion for a preliminary injunction blocking the release of Windows 98.
John Kies, an executive in the notebook division of NEC who is referred to in the DOJ deposition as J. Kies, testified that NEC wants to provide corporate notebook customers with a choice of browsers. "Our corporate customers...are very specific about what software applications...that their end users use on their notebook computers. They do not like to have choice forced upon them, but would rather choose themselves which ones they use," Kies testified.
In fact, if larger corporate customers demand Navigator, NEC will presently configure the systems with the Netscape browser, according to sources within the company. "We are providing them with the most choices that we can provide by not including a browser and letting them select whichever browser best fits their needs," Kies testified.
NEC will launch a program making it easier for their notebook customers to get Navigator after Windows 98 comes out, company sources said. The company may also make it easier for corporate consumers to get Navigator on the desktop. Currently, NEC will install Netscape for free and delete IE from Windows 95 for select customers upon request.
Gateway executive Rick Brownrigg, named in the motion as R. Brownrigg, testified that Gateway "would like the flexibility to give its customers a choice of Internet access providers as part of the PC boot-up sequence, and in the process offer those users a choice of browsers when they register," according to the filing.
Although it is not presently offering Navigator as an option to either its corporate or individual customers, Gateway will change that policy shortly. In late June or early July, coinciding with the June 25 launch of Windows 98, the South Dakota company will begin installing Navigator on all its systems, according to company sources.
Gateway's decision to begin offering Navigator when it ships Windows 98 makes sense, said Abhishek Gami, an analyst at William Blair and Associates, because the integrated IE browser in Windows 98 may turn off some customers. A PC maker "doesn't benefit from excluding a user," Gami said.
Gateway has also "inquired whether it may have the freedom to remove at least (and perhaps more than) the Internet icon from the desktop for customers who may prefer a different browser," Brownrigg testified. That request was denied by Microsoft, according to the Justice Department.
This is not the first time PC makers have attempted to break rank with Microsoft, as exhibits filed with the Justice Department's October action demonstrate. Other examples include: