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PC makers rethink Netscape

Despite the Microsoft settlement and Netscape's move to give away its browser, it is unclear whether computer makers will change their ways.

The winner in today's browser battle could well be computer manufacturers. Microsoft's partial settlement with the Justice Department and Netscape Communications' announcement that it will give its Navigator browser free to computer makers will probably lead to intense political jockeying by both companies to get their software featured prominently on the desktop of major PC vendors.

Vendors, naturally, will try to exact as many demands from Microsoft and Netscape as possible, even going so far as using Netscape as a tool to get better prices on Windows 95 and other Windows software.

"The question is 'Who is going to break ranks [with Microsoft].' I'd put my money on Compaq," said Chris LeTocq, software analyst with market research firm Dataquest. LeTocq thinks that PC vendors will begin to seriously consider installing Netscape on their PCs.

Generally, PC vendors put the icons of selected software programs directly on the Windows 95 virtual desktop--the first interface a user sees when Windows starts up--allowing buyers of new PCs to simply click on the icons to use the applications. Currently, IE is usually one of the most prominent programs on the desktop, while Netscape's browser is either less accessible or not present.

For example, most Compaq notebooks come with IE ready to run on the Windows desktop, while Navigator is merely an install option and not at all prominent. Some vendors, such as Dell Computer, even seem to go out of their way to make getting Navigator both difficult and costly.

The situation in many ways pits Microsoft's dominance in the PC vendor market against Netscape's popularity and name-brand recognition.

Now that Navigator and Communicator source code are free, PC vendors have an opportunity to expand their offerings with little additional expense. Netscape is also expected to make adopting Navigator or Communicator as easy as possible for these parties.

Indeed, there is now a movement among some top-tier vendors to reconsider putting Navigator back on the desktop, according to computer industry sources.

So far, however, no one is revealing many plans--at least not officially. Vendors assert that they are sticking to Microsoft.

Compaq and Dell are two of the computer makers that today said they will continue to bundle IE as their default browser on desktops, despite Netscape's decision to offer Navigator and Communicator free to original equipment manufacturers (known as OEMs) and Microsoft's decision to unbundle IE from Windows 95.

"We know what our customers want, and what they want is IE," said Angela Goodwin, a spokeswoman for Compaq. When asked how Compaq came to this conclusion, Goodwin replied: "I can't tell you the exact method we used to determine that...Compaq has a choice of what to do, and we chose to go with IE."

At Dell, spokesman Dean Klein said this morning's events will have no effect on his company's decision to offer IE as the company's default browser. Dell customers can get Navigator now, he pointed out, but it costs $66. Customers also have to pay an additional $15 software installation fee, bringing the total to $81.

"There is no impact because even prior to this, we have been planning on offering Windows 95 with IE 4.0 included. For us it means no change," said Steve Laney, vice president of corporate communications for Micron Computer.

"It really came down to customers continuing to push us for IE 4.0 as a solution. We did this without any pressure from anybody other than our customers. Since we're a direct player [vendor], we have constant communication with customers. It's been our experience that our customers have preferred [IE] as a solution.

But again, this is official posturing and not the way it is across the board. IBM includes Navigator on its ThinkPads as a standard feature, for instance, while Hewlett-Packard offers Netscape's browser and Communicator suite on some of its Kayak workstations.

Posturing aside, computer vendors may have more prosaic reasons for not switching right away.

The browsers are close to being technically equal, analysts say. Therefore, Netscape needs to enhance the services or content that go along with its browser to pique the interest of PC makers. Installing Netscape also requires incrementally more effort because hooks to enable IE already exist in Windows 95.

"Either one of them is a pretty good product. Netscape is going to have to offer content, easier e-commerce relationships," said Abishek Gami of Nesbitt Burns Securities.

Netscape's move will make it easier to find a space on computers, according to Roger Kay, an analyst with International Data Corporation. "When something is free, the decision becomes easier. If I were a [PC manufacturer] I would acquire both."

While Microsoft's deal with the DOJ this morning solves the most immediate conflict with the government over what constitutes an operating system, the debate will become more complex with the arrival of Windows 98, noted Kay.

"The browser [in Windows 98] is more tightly woven into the operating system," he said. "This decision is a placeholder."

The opening for Netscape came about after judge Thomas Penfield Jackson ordered Microsoft to offer a version of Windows 95 without the IE browser. Originally, Microsoft said it would give OEMs three options: ship an older version of Windows 95, which has no IE function and lacks other improvements that Microsoft has added in the past two years; ship IE with Windows 95, including the browser's icon on the Windows desktop; or ship a defective version of Windows, stripped of all IE files.

In earlier sworn testimony, a number of companies expressed their desire to ship Windows 95 without the browser icon. Compaq, Gateway 2000, and Micron Electronics all were eventually required to carry the IE browser and the desktop icon as a condition of licensing Windows 95.