Daniel Jungwoo Kim

2012196006
Business Negotiations
5/26/15

Case Study: Double Dealmaking in the Browser Wars (A)

1. Netscape was a dominant player in the browser industry with 70-85% market shares. Due to
this strength, it played out the negotiations with AOL as if already claimed and lost focus on
considering interests for both parties. Netscape refused to accept offers that AOL had made and
trusted the bad relations between AOL and Microsoft as a major deciding factor. Also, Netscape
viewed AOL as an increase of their revenue rather than seeing the big picture where Microsoft
was a strong potential competitor which could use AOL for its growth. Having such a large
market share seems to have made Netscapes senior executives develop a strong ego and
cockiness. With its technological advantages over Microsofts Explorer, Netscape was confident
and that they would not have to make efforts to adjust and develop its technologies to adapt more
effectively with AOLs services. However, the focus should have been in being sure to keep its
industry competition in control and not let Microsoft get such a large deal. AOLs presence and
customer population was an important asset that should have been prioritized to gain.
AOL not only wanted a low price browser, but an effective one in which it could maintain its
customer growth over competition with the growing MSN network. The integration of the new
browser would have to be smooth in terms of look and feel as well as the necessary functions. Its
bad relations with Microsoft, industry competition, and lacking technology of Explorer made it
seem clear that Netscape would be the clear victor of the deal, but having David Colburn, a new
addition to the company, showed greater deal possibilities that may have been neglected by
others who shared AOLs corporate hate for Microsoft. If Netscape were to be more accepting,
the two companies could have joined to keep Microsoft from taking over both their industries. In
terms of its options, AOL had a strong position over both companies because AOL is a large
customer, and could balance which company offered the better deal and take the objectively
more appealing one.
Microsoft had a weaker position than Netscape but prevailed by adjusting to accommodate AOL
and giving up part of its MSN investment value by providing AOL on its own website. Netscape
did not acknowledge Microsoft as a viable party in the deal making for AOL, making arrogant
arrangements with AOL, which produced a desperately needed gap for Microsoft to take
advantage of. As a small player in the browser industry with lacking technologies but large goals,
its eagerness to gain AOLs long term partnership and devising a value creating strategy was a
factor which ultimately won the deal.

2. What broader lessons about deal making should you take from the experiences of each of the
protagonists?
Companies like Netscape should keep its focus on future perspectives as well as the present.
Short term revenue is less of a factor that should be focused on for successful companies to
maintain its market advantages because competition is always trying its best to challenge the key
players. The value of AOL was greater for Microsoft than it was for Netscape in potential
interests and that should have come up in the analysis. Furthermore analyses should be flexible
enough to identify deal changers such as a newly hired negotiator who does not share corporate
culture, or hate for Microsoft.
3. Now consider the second set of negotiations involving KPMG. Evaluate Netscapes actions so
far in the negotiations with KPMG. Specifically, what did they do well? Poorly? Evaluate
KPMGs actions so far in the negotiations with Netscape. Specifically, what did they do well?
Poorly? Evaluate Microsofts actions so far in the negotiations with KPMG. Specifically, what
did they do well? Poorly?
KPMG wanted an internal computer network that is effective in compatibility (cross-platform)
and could be implemented quickly while having a low cost. Netscape was confident that when
approaching a company, with prepared arguments, service additions which provide solutions, and
actually making the sale, Netscape is the preferred choice over Microsoft. Not making the same
mistakes and identifying the KPMG account as a very important customer, as well as potential
partner, Netscape was able pitch a better proposition than with AOL. KPMG and Netscape were
able to create value synergy by utilizing each others valuable assets such as implementing
Netscape worldwide with reselling and recommending of Netscape to increase market range.
Expanding sales to large corporate customers is what both software companies were seeking so
Microsoft should have done a greater proposition to compete on the same level as the
technologically advanced Netscape. Microsoft initially suffered from its reputation for driving
one-sided deals and still lacking technology behind Netscape. KPMG worried about the
additional costs of unifying all employees to change to Windows, therefore, Microsoft could
have been better off offering Windows for free to compete in overall pricing, a move that was
deemed effective in the Vinod Khosla case.
4. What, if anything, would you advise Barksdale to do now?
The most important act would be to pursue the many corporate clients of KPMG. By riding the
success of the deal with KPMG, Netscape would have better interests in persuading those clients
to follow the trend. With Microsofts declaration of being a serious competitor in the browser
industry, blocking the potential growth or stunting it in the least, should slow down R&D, buying
more time for Netscape to set its roots to further dominate the market and produce more results
from its own R&D