MICROSOFT VS

NETSCAPE FOR AOL

SCENARIO
• Steve Case’s AOL searching for a internet browser to market their
products.
• Microsoft and Netscape are interested.
• Netscape BATNA is strong due to technical superiority, presence and
dominance in market share.
• Microsoft has weak BATNA due to a new entrant to browser market
and being technically inferior.
• Bill Gates knew to win the scenario he needs to have greater presence
and competitive advantage.
APPROACH BY NETSCAPE
• They wanted to charge high per copy fee.
• “Browsers for dollars” agreement.
• Steve Case viewed the approach as we are hot and we will sell to
anyone with high fees.
• This was the big mistake.
• Reduce the scope
• Agreesive and
MISTAKES BY NETSCAPE
• Not thinking about counterparts. (Microsoft, how to engage with
parties).
• Reducing the scope.
• Superiority Syndrome
• NOT LOOK FOR LINKS ACROSS NEGOTIATIONS
• The importance and means for truly understanding, reading,
and building rapport with your counterparts
 How assertiveness and empathy can be productively combined
 How to act opportunistically as circumstances shift while
maintaining a strategic perspective
 How dogged persistence rather than blinding insight
 Effective (and ineffective) ways to make proposals, frame
concessions, build credibility, utilize “constructive ambiguity,”
APPROACH BY MICROSOFT
• They knew that they haven’t got much leverage on the table.
• Be creative and increase the scope of the deal.
• They looked at the timing and sequence of negotiation and turned their
BATNA from weak to strong.
• Zoom in and Zoom out
• Shifted focus from technicality to marketing by bundling AOL in windows OS
for free!
• Promised AOL that they would provide additional technical adaptations if AOL
were to sign a multiyear contract.
• Perfect for both parties simply because collaborative seller Microsoft had the
foresight and negotiation skills to change the nature of their offering to their
advantage
END SCENARIO
• AOL now would be able to put their icon next to Microsoft network
icon.
• “ most valuable desktop real estate in the world”.
• Now they could reach out to 50 million people market without any
cost.
• AOL would no longer have to market by sending out its discs at a cost
of 40-80$ per acquired customer.
• Still actively compete with Microsoft in the process.
• In short term Microsoft lost their market share but in the long term
achieved its loftier goal by gaining a significant share of the browser
market.