American History 1988
Chapter 367 - 356 The Reason for Doing So

Chapter 367: Chapter 356 The Reason for Doing So

"Since we already know that in the future, our browser will gradually fall into a passive position in competition with Microsoft.

Why not prepare in advance? Free is the best strategy."

Neither technological superiority nor price advantage is reliable.

Because Microsoft has a unique platform advantage, they have various ways to bridge the gap between the two products.

At this time, free becomes a powerful countermeasure, because it can instantly put Microsoft’s browser in an awkward position.

"Imagine what would happen if we announced that Explorer is free?" Dean looked at the people around him.

"Users would undoubtedly support this decision without hesitation!" Barksdale could already envision that situation.

Not to mention the regular users, corporate users would certainly rejoice.

They are already loyal users of Netscape; they are accustomed to the Explorer browser.

If the new version is free for everyone, what reason would these corporate users have to reject it?

"For many large companies, it would mean a significant savings in their budget," Clark analyzed calmly.

Netscape’s current browser is sold by the number of copies; those large enterprises have tens of thousands of people.

"What about the impact on Microsoft, assuming their browser is also free?" Dean continued to steer the conversation.

"Would Microsoft do that? They’re used to making money off every average person, that’s their forte," Durell expressed his doubt.

"This is a hypothetical situation; we must consider the worst-case scenario," said Dean, who, of course, had his reasons.

In commercial competition, strategic planning must account for the most disadvantageous situations.

"If Microsoft’s browser is also free, it still wouldn’t affect us."

Clark spread his hands innocently, "Users will continue to choose us because the Netscape browser offers a better experience."

"And there’s little Microsoft can do, they can only seek to beat us on a technical level," Barksdale understood on a deeper level.

"So gentlemen, do you see the problem?" Dean clapped his hands to draw everyone’s attention, "The free strategy would put Microsoft in a passive situation.

It directly eliminates the price tag from both parties’ hands, and nobody can play tricks with it anymore.

Then, if they want to beat us, they can only start from a technical standpoint, that is, to make a browser better than Explorer.

Honestly, do you think that is possible?" Dean’s rhetorical question made everyone laugh.

"If they are relying on Mosaic to catch up with Explorer, I can guarantee that might be possible after World of Zombie Apocalypse, because everyone would no longer exist."

Anderson’s sarcasm made everyone laugh even louder.

It obviously doesn’t conform to industrial laws; any product iteration needs time.

Although Microsoft is large and established, this doesn’t mean they can leapfrog generations of version updates and surpass Netscape.

Microsoft also needs to walk the path Netscape has already traveled, and during this time, Netscape is not just standing still.

Perhaps Microsoft’s strong staff could accelerate this process, but now Netscape is no slouch either; they also have a pool of talent.

So according to normal patterns, the competition between the two would last a long time.

By leveraging their team’s advantage, Microsoft could eventually catch up with Netscape, but that time might be years away.

But by then, the outcome would no longer matter, because several years’ time would be enough to solidify Netscape’s position.

When choosing browsers, users will, of course, opt for the one with the greatest technological edge.

Netscape maintaining its lead would result in Microsoft’s browser eventually being ignored; this is an objective law of network effects.

Gates’ concerns are not without reason; developers will only build ecosystems for the product with the largest user base.

With Netscape gaining a larger advantage early on, developers would also favor the Explorer browser platform.

Technological edge, along with ecological construction advantages, would all lead to Microsoft’s browser becoming increasingly desolate.

"And this is just the worst-case scenario; it’s possible that Microsoft would not even wish to make their browser free," Clark analyzed optimistically.

"The situation would be even more interesting then," Dean shrugged, "I’m really looking forward to seeing Microsoft’s reaction when Netscape announces it’s free."

"Haha~" Clark and Barksdale both laughed heartily.

"But guys, aren’t you forgetting something?" Durell had to interrupt, "Netscape is getting ready to go public!

If we announce it’s free, then it means Netscape’s profits will inevitably shrink, and Wall Street would not welcome such a move."

Durell’s words gradually calmed everyone down; the IPO concerns everyone’s own interests.

"It would indeed have some impact on Netscape’s market value, but I believe it’s not enough to shake our foundation."

Of course, Dean was aware of the consequences of such an action, but to survive, one must give up the short-term benefit.

"Barksdale, what percentage of Netscape’s total revenue is currently from the Explorer browser?"

"About one-third, the various application plugins and network licenses are our main sources of revenue," Barksdale knew these details by heart as the CEO.

"Look, the browser is not our lifeline.

While giving it up means a clear decline in Netscape’s revenue."

"But as far as I know, our email service has picked up recently, it can compensate for the browser’s shortfall," he said.

Upon hearing Dean’s reasoning, Durell couldn’t help but turn his gaze to Barksdale.

The latter affirmed the statement, "Our email service’s pay rate has reached 5%, it can generate 60 million US dollars in revenue for Netscape every year."

"5% is definitely not the endpoint, I can guarantee they will exceed 10% in the future!

Our browser is sold as a perpetual license, its sales are bound to slowly decrease.

Therefore, these two businesses will act as a hedge against each other to some extent, which can minimize our losses."

Dean’s explanation made Durell hesitate, as a venture capitalist, he was most reluctant to see Netscape’s stock price affected.

"Durell, we must do this!" Dean said earnestly, his intention was clear.

Even if Durell opposed, he would exercise the rights of a major shareholder and forcibly pass this resolution.

"Fine, but we must wait until Netscape goes public before announcing this decision."

Durell reluctantly agreed to Dean’s suggestion, partly out of trust in Dean’s judgment and partly because he did not want to fall out with Dean.

Obviously, Dean’s status in Silicon Valley had grown to the point that anyone would think carefully about the consequences before making any decisions.

"Of course, we will announce this decision after Microsoft clarifies their browser sales policy," Dean said with a mischievous smile.

Clark and the others were first taken aback and then also started laughing.

That way, things might become even tougher for Seattle.

...

It’s now the end of July, and only a few days left before Netscape’s IPO.

Under normal circumstances, Dean might have already been settled on the East Coast by now.

But Bit had his heartstrings tugging, no, to be precise, it was the consumer division that was always on his mind.

"Is this the Consumer Division’s revenue situation for the past two months?"

Dean kept flipping through the financial report in his hands, and as series after series of numbers came into view, his smile grew wider.

"As you can see, Boss, the Toktok Gaming Center has made a total revenue of 180 million US dollars in these two months!"

When Thomas first saw the financial report, he was so excited he almost fainted.

The Consumer Division finally experienced a moment of harvest, a day he had been waiting for far too long.

As an executive at Bit almost on par with the COO, Thomas always felt uneasy at board meetings.

The directors had little regard for him, and had it not been for Dean’s support, Thomas might have already cracked under the pressure and fled.

Now, with this impressive report card, he could already envision the other directors looking at him with newfound respect.

In fact, Thomas had a premonition before the financial report came out, after all, the daily turnover did not lie.

"Looking at the data, our Toktok Gaming Center has about 1.8 million people online simultaneously each day."

As the number of produced flash games increased, the Consumer Division consolidated them into a simple gaming platform.

This was the Toktok Gaming Center, which shared accounts with Toktok and supported quick login.

With Bit’s marketing costs running into tens of millions of dollars, the Toktok squirrel logo appeared almost everywhere in the city streets.

TV program openings and sports events’ halftime breaks were opportunities for Toktok advertisements.

And this was not just in America—Europe and other regions of North America were also seeing Bit’s advertisements.

The result of these marketing efforts was that Toktok’s user base even surpassed that of Netscape’s email service.

Over ten million registered users, more than six million active users.

With just a popup, the Toktok Gaming Center easily welcomed nearly two million online users.

Although not every player chose to pay, the user base was there.

"Our first-time payment rate is over 70%, with 54% of users spending more than 30 US dollars in total, and 23% of users spending over 60 US dollars in total.

Toktok Gaming Center now has four games operating, averaging almost three million US dollars in daily turnover."

This was simply unbelievable, Thomas had never imagined that Flash games could have such huge business potential.

They looked crude and certainly didn’t compare to paid games.

"Although Flash games are not as refined in production as paid games, they are easy to pick up and have a faster pace.

Players don’t need to spend a lot of time studying strategies, which lowers the entry barrier."

This is why Flash games are popular, they are accessible and come in a wide variety.

"Of course, they are not without flaws, games produced with Flash generally have a short lifespan."

"You’re right, Boss, our first game, ’World of Zombie Apocalypse,’ has seen a significant decline in popularity recently.

I’m worried that in another two months, it might not bring in any value."

This was exactly Thomas’s concern, the lifespan of Flash games was too short. Their popularity was fleeting like the wind.

"There are ways to deal with that..." Dean mused about other tricks up his sleeve.

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