Mark Andreesen and the IMG tag

The evening of February 23, 1993 was mostly unremarkable around the internet. But on that evening, a brash young man by the name of Marc Andreessen sent an email that would drastically alter the course of history. In order to fully understand what happens there, one has to think of the internet prior to that day.

Before that message made its way through several mail servers, the internet was a mostly text-based medium. HTML, the source code for the web, may have linked to images but the idea of mixing images and text was not part of the internet experience. In fact, the idea of mixing anything just didn’t exist: a movie stayed a movie and was linked to independently but embedding it into a page was a concept that would not come to fruition until several years later.

Sound, images, moving images, text were all living in separate silos. Yes, they could be linked to but they mostly worked as dead ends as they could not move forward from there (think of a browser that would link images instead of having them embedded into the page and when you got to that image, your only available navigation would be to move back). And because they were mostly dead ends, they forced the web into a relatively hierarchical model. Text was free to cross-link but other media were not.

Andreesen’s stance was that they would implement the tag as proposed and were sending it to be discussed as part of a future implementation of the HTML standard (remember that, at that time, HTML was not yet a standard).

Netscape proprietary approach and forward motion

A few years later, Andreesen would continue on the same course with the company he co-founded, Netscape, pushing for new extensions to the HTML standard and then extending the browser even further. With every new browser introduction, Netscape would push out new features.

With much of the internet being widely open and standard-based, Netscape’s introduction of new things at a fast and furious rate rankled some of the early maintainers of the web. There was widespread worry that Netscape was “breaking” the web through its use of non-standard implementation. Among some of the things Netscape would introduce over this period would be things we cannot imagine not existing on the web.

For example, Netscape was the first to introduce web-cookies, which not only gave rise to the kind of tracking that most of the advertising industry relies on but also simplified and sped up the way in which pages could be customized or logins were remembered.

https, which is used to ensure that communication between your web browser and a remote server is encrypted so no one can break into it, was another such innovation, which gave rise to e-commerce and e-banking.

And then, there’s Javascript. In December 1995, Netscape announced Javascript as a programming language for the web that could run either on a server (but only on Netscape’s brand of web servers) or on the client. The world of programming was in a furor over the announcement, calling the language a horrible kludge and generally being unhappy that they had not been consulted to make the language more pure.

Every step of the way, developers started adopting Netscape’s innovation, giving rise to sites showing a “Best viewed with Netscape” icon. This, in turn, led the Netscape browser to be the most used web browser on the Internet, at some point being used for nearly every 8 or 9 out of 10 web page views on the internet.

Most of Netscape’s inclusions eventually made it into other browsers as they tried to capture market share from Netscape, and eventually, most of those innovation were standardized, ensuring their continuation moving forward. Netscape’s leadership and willingness to stand up to the rest of the industry in order to move forward may have eventually led to its death as a company but its impact is still felt daily.

Microsoft and AJAX

One of the companies that tried to mimic Netscape’s strategy was Microsoft. In order to make its web browser, Internet Explorer, more relevant to developers, Microsoft tried to introduce changes that were mostly proprietary to its web browser. Among those was a technology called ActiveX, which was Microsoft’s proprietary approach to plug-ins. Trying to differentiate its Office suite and Exchange server, Microsoft introduced the XMLHTTP ActiveX component, which allowed web applications to become much more interactive, in 1999.

Whether it was hatred of Microsoft or lack of awareness, the technology did not really get widespread adoption until Jesse James Garrett named the technology AJAX, for Asynchronous Javascript And XML.

The lesson in this is that to break a standard is not enough to get things moving forward. A way to brand that standard so it becomes easily understandable to a wider public goes a long way to garnering support for new technologies, whether they are standardized or not.

HTML5 needs a posse

Previous history points to progress on the web being largely made because people were willing to take a stand and move things forward, standards be damned. But it seems that few are willing to move things forward in a drastic way. To date, complete support for existing standards has been a challenge and it seems there is some level of calcification around breaking new ground.

The wonderful set of underlying technologies making the core of what we know as HTML5 may not be perfect but it’s the best thing we have so instead of crying about the poor implementation of this or that component, instead of asking why it’s missing certain pieces, let’s go out, as developers and stretch the limits of what is possible in a browser.

Break new ground and break old browser. Once you’ve done so, ask the others to implement the features you’re leveraging.

To implement in a standard-compliant way may be smart if you want to cater to the masses but if you want your app to be exceptional, you have to be willing to take the hits. Go ahead and break new ground by looking forward instead of staying to the shores of yesterday’s standard compliance.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Pushing beyond standardization. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Looking at the basics

As frequent readers of TNL.net know, I have to a tendency to try to run some numbers before passing judgement. Oftentimes, I discover that my hunch are correct but, almost as often, I find some interesting and surprising nugget of information in the data. Ultimately, though, it’s a question of gathering the information, something that too few people seem willing to spend time on.

So for this IPO, I decided to investigate how some fundamentals may be working either for or against the success of the LinkedIn IPO. My instinct was telling me that the fundamentals may be different now but I needed the data to assert which way things went. A lot of searching through both the web (and, as I mentioned last week, getting historical data can be hard on the web) and through paper record (books and magazines I still keep in my library), I was able to come up with the following chart:

One of the things that become apparent at first glance is that we are talking about totally different scales of business. Netscape was a company operating at a loss ($8 million) with very small revenue (not even a million dollars) when it went public. By comparison, LinkedIn seems to be a relatively healthy business with profits of $15 million on almost a quarter billion in revenue. On the other hand, that business paled in comparison to Google, which was generating profits of a quarter billion dollars on revenues of $1.4 billion in the run-up to its IPO.

Adding to the challenge in comparing them was the fact that they were all looking to raise different amounts so I decided to play “what if” with the different stocks.

What if LinkedIn had launched as Netscape?

I decided to normalize the data based on a revenue, assuming that LinkedIn would try to get a market capitalization equivalent to that of Netscape based on revenue:

So, already here, we see some fundamental differences. Netscape would not even be allowed to go public today based on the paltry revenue they were generating at the time of their IPO and LinkedIn would turn into the largest corporation in the world if the same logic had been applied to its revenue stream.

What if LinkedIn had launched as Google?

But the irrational exuberance around the Netscape IPO should not serve as a way to give LinkedIn a clean pass. In order to do so, I decided to compare the company to Google at the time of its IPO. People who were around then will remember that the Google IPO happened at a time when internet stocks were mostly out of favor but Google was garnering a very strong following. In a lot of ways, Google had the media presence of a Netscape in its time but with real revenue and earnings.

As price to earning ratio are a valuable way to evaluate companies, I decided to base my comparisons between LinkedIn and Google on it. So here goes:

The difference largely comes down to the number of shares outstanding but ultimately, it looks like LinkedIn P/E ratio are not that wild and while IPO Opening day are too small a data set to really make wild generalization, it seems that the LinkedIn IPO was one that basked largely in relatively rational behavior.

Conclusion

If the LinkedIn IPO is an example of what this boom cycle is going to look like, we may be in luck as the markets seem to be acting a much more rational, profit-focused manner than they have in the past. My read is that there may even be some level of conservatism to the way markets are approaching internet stocks and a healthy skepticism that will benefit real companies by weeding out the ones which wouldn’t make the cut under normal conditions.

Update: Some of my calculations were wrong and, thanks to many commenters, I finally have the P/E numbers corrected. Based on the new number, the conclusion can be vastly different as the P/E ratio for LinkedIn today seems to be much higher than it was for a company like Google. Can LinkedIn be 5 times as successful as Google has been since its IPO? I don’t know. Is there some inflation due to a more optimistic market outlook? Absolutely.

At the end of the day, it looks like LinkedIn is overpriced, when compared to Google, and underpriced, when compared to Netscape. What that means in terms of investment strategy is something I’ll leave to people smarter than me to figure out.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Is LinkedIn the new Netscape or the new Google?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

IM

: One of the conditions for the AOL/Time Warner merger was that AOL open its instant messaging platform to other parties. By agreeing to interoperability between the AOL IM client and MSN messenger one, AOL will now be able to point to its “openness” while maintaining a relatively tight control over the progress of that tool. I am sure the two companies are interested in working together and somehow doubt that they will be very interested in opening the world to other competitors.

At the current time, IM has taken the consumer world by storm and is starting to make headway in the enterprise. Because of its presence concept (you can see whether the people on your buddy list are online right now or not), it will eventually become a critical tool in the enterprise, moving some data traffic from the phone and email to this new platform. Already today, enterprises that have implemented IM solutions are seeing large amounts of traffic on those networks as employees send the shorter requests via this tool. Enhancements in the collaboration aspect of those tools make them perfect to be used for setting up online discussions and document sharing. I suspect that, because AOL is forbidden from adding new features to its IM platform until it has shown to be more open, we will see the company point to Microsoft and get a free pass in terms of adding new features. This will be good for AOL because it will allow to enhance its enterprise offerings. It will also be good for Microsoft, as it will probably be able to increase its footprint into that space.

Long term, I would expect most of the development of this eventually ending on Microsoft’s lap, with AOL doing an asset transfer of its software division to Microsoft.

Digital Media

: Part of the deal includes a non-exclusive agreement for AOL to use the Microsoft Windows Media 9 software suite. Once again, this is good for both companies and bad for every single one of their competitors.

AOL will benefit from the lower cost of software acquisition moving forward. As it looks to move more into fee-based digital media services (with words that it could offer TV shows, music, movies, etc… from its vast assets collection) the company will make more substantial investments into those kinds of technologies. Since this is a partnership, I suspect the products will be heavily discounted.

Microsoft wins in that, if AOL, with its fairly large customer base, start offering more services running on Windows Media 9, it will make it easier for Microsoft to go after other media player and present its installed player footprint as a competitive advantage. The story will go as follows: use Windows Media 9 server and you will not have to worry about your customers having to download extra software. Of course, Windows Media servers will continue to run on the Windows operating system, which should increase sales in that market and protect Microsoft to some extent from the Linux onslaught.

Another important part of this portion of the agreement is that it will allow the two companies to set standards for digital rights management. DRM is basically covering how to ensure that copyrights and purchase rights are assessed on digital media. What this means is that a DRM system basically encodes a piece of digital media (whether it is a movie, music track or piece of software) to include information about what you purchased and how you are allowed to use it. For example, the Apple Music store currently sells music tracks that you are allowed to use on only three computers. Because AOL is one of the largest producer in the world of such media, and Microsoft regards this software area as a very lucrative market in the future, the partnership will give both players a substantial amount of power in shaping the future of digital media.

AOL wins in that it gets someone to do the heavy lifting on the software side to tighten up control of digital media. Microsoft wins in that it gets a better understanding of what large media companies will want and builds a solution it can then resell to other companies. Once again, this is also a good argument for furthering the number of implementations of windows servers as I suspect that Microsoft will strongly recommend media companies use their platform to handle this.

Browsers

: By now, the browser wars are, at best, a distant memory. While a few holdouts do not use Internet Explorer and considerable development and innovation is still happening by makers of non-IE browsers, the market for alternative browsers is relatively small. At last count, IE was controlling over 85% of the global market. The only bright spot in that market was a browser named Mozilla, an open source project for which Netscape, a subsidiary of AOL, was the largest contributor. Because of the bad blood between America Online and Microsoft, there were a lot of rumors about AOL implementing Mozilla as the core browser in its flagship client (it has already done so on the Macintosh computer). With the announcement that AOL will get a seven year royalties free license for Internet Explorer, it seems pretty apparent that support for Mozilla from the AOL camp will probably wane. The long term outlook for the Netscape unit does not look very bright, even if the AOL chairman said that they were not closing the unit for now.

Politics

: This announcement also shows some interesting development in internal politics within the two companies.

In the mid-90s, Microsoft was starting to move more into the general media space. With this agreement, Microsoft signals the completion of a shift back to its software roots. It is probably a realization that there is still a lot of growth in that arena and that it doesn’t make sense from their standpoint to try to get into the media world by acquiring and/or building media assets.

On the AOL/Time-Warner front, this announcement shows a clear power shift in who controls the company. The power is now in Time-Warner hands, with any concept of competing with Microsoft on the software end now a distant memory. Time-Warner understands media and figures that it is better to rely on an outside party to deal with the software side of the business than to try to develop things themselves.

I am sure I’m missing a few things but I expect this story to continue unfolding and having repercussions across the whole Internet space.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title AOL-Microsoft Settlement: The Future. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I used to love Netscape but was seduced by Microsoft’s Internet Explorer 4.0 and never went back to Netscape on a regular basis since. However, something told me that a browser that was two years in development could outdo the Internet Explorer 5.0 browser I have on my machine. So I downloaded Netscape 6.0, the first browser to be released by Netscape since it was acquired by AOL.

The first thing that strikes me in this browser is that it seems very me-too’ish. A lot of the features that made IE a better browser are now there: small install program, not having to install the mail client (I use Eudora anyway), faster page presentation. All those were among the features that lured me into Microsoft’s camp when they released their browser.

Sure, having them try to register me to Netcenter was annoying (I managed to bypass that) and it’s true that the browser color scheme (horrible blue) was terrible but I figured that this were only temporary pains.

I loaded the 10–20 sites I hit most of the time and they loaded almost as fast as they do in IE 5 and much faster than they used to in Netscape 4.7 (which still leaves me to wonder where Netscape 5.0 went…)

Some nice features include the “remember this decision” box when you tell Netscape to refuse or accept a cookie, allowing you to select which cookies you want to receive and which ones you don’t and, over time, have to do so less and less. The same should have been done for the password feature (another feature that was in IE before NN).

So far so good. Yes, this version is a vast improvement over the previous version of the browser. But is it as good as IE? I figured that the differences would probably appear over time.

But then I tried to start customizing it. That’s when the problems began.

The first thing that was annoying was when I wanted to customize my bookmarks bar. The browser connected to a page on Netscape’s site… Unfortunately, the page was not there and I got a 404 message. In other words, I can’t customize my bookmarks bar: Major problem as I usually get rid of the links that are on there and replace them with my own choices.

Then I figured I would try to get rid of the blue bar, by customizing it. After some searching on Mozilla.org, I discovered that it is customizable… if you’re willing to go and add and remove some files in the Netscape directory. Great if you’re a programmer, not so good if you’re a consumer. Another score for IE, which has a browser accessory to do so easily.

On the standard compliance end, Netscape took the high road and did a good job at supporting most of the W3C standards. Problem is: very few other people on the net did and, as a result, pages that were once “Best viewed with Netscape Navigator” now can’t load because Netscape no longer fully supports its non-standard version of DHTML. Ouch! This lack of backward compatibility could be distressing. Netscape can’t afford moves like that now that it doesn’t own a 90% marketshare.

The next test was on the plug-ins end. Sure, IE has a definite advantage with some of its ActiveX plugins but that was resolved by Netscape with its easy plug-in setups in the 4.0 version of the browser. Well, we’re now going back to the old days, when you had to download a plug-in, stop Netscape, install the plug-in, and restart Netscape.

Except, you can’t find the plug-in. I figured the first one I’d go for was Macromedia Flash. I figured a lot of site use Flash, might as well get the plug-in. Oops… I was informed by Macromedia that they

a href=“http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash” mce_href=“http://www.macromedia.com/shockwave/download/index.cgi?P1_Prod_Version=ShockwaveFlash” title=“If Macromedia can’t find it…”>are unable to locate a single Web player that best matches your platform and operating system

. Well, I guess I’ll live without Flash but that pushes Netscape back. Another score for IE.

An hour into my Netscape experience, I went back to the AOL site and then it happened, the sight that I now remember fondly from my days as a Netscape user:

This program has performed an illegal operation and will be shut down.

I figured that it was a preview release and that it would get better and, after shutting the program down, didn’t go back to it. But I found it worrisome that AOL (now Netscape’s parent) would be the site to crash this browser.

It’s such a shame, when I think about it. This browser could have been good but it wasn’t and as, a result, only served to emphasize why Netscape lost the browser war: it just wasn’t good enough to compete in the marketplace.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Netscape Navigator 6.0: Better?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I regret to announce the end of my efforts to mediate the Microsoft antitrust case

said Judge Posner in a statement released on Saturday, April 1st.

But it wasn’t.

After 4 months of discussions, any chance for a settlement between Microsoft and the US government seems to have ended fruitlessly. Many magazines, newspapers and web sites have been pointing out the fact that Judge Posner did not thank the states for their work in his brief statement. As a result, many believe that the states’ demands were largely responsible for the breakdown of the talks.

But the question remains as to what was the content of those talks. While most of the 20 drafts that were put together by the DOJ and Microsoft were kept a secret, word has leaked out regarding the content of some of those drafts. It includes:

• Uniform pricing structures that would disable Microsoft from offering preferential rebates and creating bundles for some partners.
• A provision forbidding Microsoft from striking exclusive contracts with other companies (for example, as it did with AOL, giving it an icon in Windows in exchange for packaging IE)
• Full disclosure of all the API to all Microsoft software, giving away what has long been believed to be a Microsoft advantage as it was supposedly allowing Microsoft internal programmers to develop software that better integrated with the Windows OS.
• Box manufacturers would be given source code to Windows and allowed to modify it at their will. They would be able to add and remove new features to it, such as, for example, changing the web browser. Microsoft would not be responsible for supporting those modified versions of windows.

Meanwhile, the 19 states involved in the negotiations would not go for anything less that a full break-up of Microsoft into several Baby Bills.

However, when you look at it closely, the proposal of the 19 states may be a bit shortsighted.

By creating a set of Baby Bills, we might end up with not one but several monopolies: One in the OS space (Windows has over 90% penetration in the consumer market), one in the application space (Office has more than 90% market share in the office suite market on both the PC and the Mac), and potentially in the Internet space (Internet Explorer has now supplanted Netscape Navigator as the browser with the largest market share).

However, while this case has become the computer equivalent of afternoon soap operas, with people tracking its every move, whatever happens this week when Judge Jackson presents a ruling that will most probably be unfavorable to Microsoft, may have little influence on the computer industry.

First of all, Microsoft will most probably appeal the ruling, going all the way to the supreme court and thus delaying its final impact for at least another year.

For starters, a lot of the battle is around Microsoft Windows and its larger implications in terms of helping Microsoft control the Internet. However, the landscape has dramatically changed since the DOJ and 20 states filed their case against Microsoft. The case was originally kicked off by Netscape as a salvo against Microsoft in the browser battle. Since then, Netscape has become a unit of the new behemoth in the Internet industry: America Online. AOL, which recently announced it would acquire Time-Warner, was playing both side of the fence. On the one hand, they are Netscape’s owners, and on the other, they are bundling IE as part of their client (of course, this allows them to also have an icon in Microsoft Windows, which has been in large part responsible for their success in customer growth).

At the time, Microsoft did have an inferior browser and was loosing in the marketplace. However, with the release of IE 4.0, and subsequent release of their 5.0 client, they started to gain market shares. Netscape was not happy about that. On the one hand, Microsoft was going faster than they were in terms of releasing new products. And, on the other hand, Microsoft was working on developing a version that would run better on four platforms: Windows, Macintosh, Solaris and HPUX. Meanwhile, Netscape was trying to support their browser on no less than 18 different platforms.

The interesting thing was that Netscape was complaining that Microsoft was going to compete with them. Yet, they were making it clear that they were out to:

replace Windows

and when they lost went to the DOJ to complain about Microsoft making their browser available for free even though they had adopted the same tactic long before Microsoft did.

Netscape’s failure was in the marketplace but since resentment of Microsoft’s success has always been a good thing to bet on, it played the legal card and got the proceeding started.

Meanwhile, Microsoft pushed more and more products out but failed to capture significant market shares in some critical Internet areas.

First, it attacked the online service business. AOL became the top online service, beating out Microsoft’s own MSN, even though MSN was bundled with Windows (this interesting little fact seems to show that bundling software with Windows is no guarantee that it will win out in the end.)

Realizing that it was loosing on that end, Microsoft decided to recast MSN as a portal but that decision was made too late and Yahoo! became the top search engine, followed by AOL’s own site.

On the server end, Microsoft is still trailing the free Apache server for the top position by a very large margin (Apache has a 60% market share, while Microsoft’s IIS has a 20% one). It’s efforts to cast its back-office suite of tools as the Internet suite of choice seems to have gone about as badly, with Microsoft trailing Oracle in the database space. Furthermore, some of Microsoft’s efforts to capitalize on their windows platform (remember ActiveX anyone?) have been received with less than enthusiasm by the development community… and let’s not forget Linux. While Microsoft was trying to make a big push against Solaris on the server end, the Linux crowd started going after the mid-size server market. As a result, Microsoft has not participated in the growth that other server-end operating systems have seen in the past few years. Linux has taken most of that growth away from Microsoft, representing a major threat to Windows NT. Linux has now become such a threat to Microsoft that the company is now breaking its own rule of never mentioning some other company’s software in presentations.

In new markets, Microsoft has also seen some very strong competition. While it has been moderately successful in the convergence space with WebTV (a company it bought for $420 million), the battle is just starting and AOL will soon be able to bring the power of its 22 million strong user base to the party, giving Microsoft’s some new headaches (WebTV has about 1 million users).

On the wireless end, Microsoft’s attempt to push Windows-CE against the PalmOS has been rebuffed and Palm computing has been very smart in licensing its operating system to cell phone vendors and other partners, creating a new platform Microsoft has to battle.

Last but not least, Microsoft is now trying to enter the gaming console market (with their X-box, promised for a Christmas 2001 release) and is thus entering another market in which it has little or no market shares.

When you look at this, you may say, well, why would anyone care about Microsoft’s dominance. It seems to be waning, right?

Well, yes and no. While the market is currently showing a company that’s fighting a war on multiple fronts, it’s also a company that has successfully managed to buy itself a seat at the telecom table (Microsoft now has investments in AT&T, Comcast, Nextel, and Qwest), as well as some other infrastructure plays (Akamai, Concetric Networks, Tut Systems).

What’s happened really, over the last few years, is that Microsoft stopped being a pure software company. Sure, it still sells software but its main business over the past few years has been as an investment firm. When you look at it this way, its dominance may somewhat make sense, much like Kleiner Perkins’ does.

As a result, I’m afraid a breakup could represent a major problem for our industry. For starters, look at the suggestion that’s been the most often floated: one company doing windows, another doing applications, and another doing Internet stuff. If you go with that breakup, you still have a dominant player in the OS market, a dominant player in the applications market (remember, this group would get MS Office) and a weak Internet company.

Most of Microsoft’s problems have stemmed from the fact that it has grown too big for its own good. For starters, it is now in so many markets that it is hard to figure out whether it really does wield as much power as it used to. Second, it is such a big organization that I seriously doubt programmers talk to each others as much as they should. However, if you were to break it up as more than three companies, you could get somewhere.

Let’s say we were to follow the logic of Microsoft as a VC firm. If we do so, it’s market cap is really not so huge, considering the number of companies it holds. It is, after all, a VC with over 200 companies in its portfolio.

Either way, the battle will go on and sometimes this week, a ruling will be issued but in the long run, I seriously doubt that anything that happens this week will have any lasting effect on the computer industry. Microsoft will win out or loose out in the marketplace, regardless of the outcome of this trial.

We’re living in too dynamic a marketplace for it all to make sense. In the end, however, we will all regret that case ever happening because it will set a precedent as to whether the government can get involved into IT affairs. It may be the only lasting effect we will all be forced to feel.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title MS-DOJ Talks Falter: So What?. You can follow him on twitter here or receive his weekly newsletter by subscribing here.