American History 1988
Chapter 394 - 383 Tough

Chapter 394: Chapter 383 Tough

If you were to ask who was the largest computer manufacturer in the world in the mid-90s?

Many might think of Hewlett-Packard, or perhaps Dell or IBM, but in reality, it was none of these.

In that era, the company that sold the most computers was Compaq.

Yes, this computer manufacturer, which later disappeared into the annals of history after being acquired by Hewlett-Packard, was the undisputed king of computers at the time.

As early as 1994, Compaq had outpaced IBM by selling 4.84 million units, surpassing IBM’s 4.34 million units and claiming the top spot in the market.

At the same time, Compaq was the fastest-growing company in American history, a record that still holds to this day.

For instance, in its first year of operation, it sold 53,000 computers, reaching an astonishing sales figure of 110 million US dollars.

Then, in the second year, namely 1983, it successfully went public on the New York Stock Exchange.

By 1984, sales had exceeded 150,000 units with a revenue of 329 million US dollars, making it the youngest company in the Fortune 500 in history.

In 1985, its revenue reached 504 million US dollars, and in 1987, its sales officially entered the billion-dollar club.

After that, Compaq’s development entered the fast lane, exceeding a total income of 3 billion US dollars by 1991.

Then in 1995, coinciding with the arrival of the internet wave, Compaq’s business experienced another qualitative leap.

The reason it could ascend to the throne of the PC market in just over a decade was related to Compaq’s bold innovations.

It was the first company to manufacture IBM-compatible machines, as well as the first 386 computer manufacturer.

In an era dominated by IBM computers, Compaq took the lead by using Intel’s 386 processor and designed the DeskPro 386, a computer that became popular worldwide.

However, such a behemoth in the computer market had recently run into trouble.

This trouble did not come from its competitors but from a software company entirely unrelated to hardware manufacturing.

Yes, that’s right, Microsoft from Seattle, for the first time exercised its "addendum clause" right with computer manufacturers.

The origin of this issue has to do with the browser market, where all the roots lie.

As the largest computer manufacturer in the industry, Compaq’s customer base has a much higher proportion of corporate users compared to individual users.

As is well known, Netscape Navigator is the choice of most people, especially corporate users, who obtain their network licenses from Netscape.

When Internet Explorer 2.0 was initially released, Netscape had already been consciously cultivating the corporate user market.

This included not only various security protocols and programming languages but even maintaining a focus on the professional edition browser tailored for enterprises.

Later, with the birth of app stores, many companies regarded the Netscape browser as essential office software.

Because some of its practical plug-ins could greatly facilitate office life.

Therefore, to respond to the corporate users’ demand for installing the Netscape browser and to avoid desktop icon clutter,

Compaq, at the end of March, removed the Navigator browser icon from the pre-installed system.

You read that right—this Navigator browser is Microsoft’s own browser.

Since the Seattle conference in January, Microsoft had been launching attacks everywhere, pressuring all of its business partners.

AOL and other ISP operators were part of it, so surely Compaq, Dell, and other computer manufacturers were of utmost importance.

Microsoft had essentially greeted every computer manufacturer with the understanding that every computer produced with the Windows system would come pre-installed with the Navigator browser.

Gates valued the incremental users in the computer market, having foreseen that the proliferation of the internet would further increase the demand for computers.

If he could control the source, he could attract these potential incremental users to the Navigator browser.

In the existing market, Netscape reigned supreme, forcing Gates to find a solution at the source.

Yet even so, many enterprises insisted on having Netscape’s browser pre-installed when purchasing computers.

Due to its popularity, Compaq even highlighted Netscape as a major selling point in its promotions.

Furthermore, Compaq reached a collaboration agreement with Netscape: any corporate user purchasing Compaq computers could enjoy a free one-year subscription to Netscape’s network certificate.

This was Netscape’s countermeasure against Microsoft’s competition, and similar agreements were being negotiated with several other computer manufacturers.

Without a doubt, the synergy between the two nearly blocked the growth path of Microsoft’s browser.

Even more audaciously, Compaq believed Microsoft’s browser was too inferior and had received poor user feedback.

So, starting from the end of March, Compaq simply deleted the Navigator browser icon.

And Compaq’s move had thoroughly enraged Microsoft, or Gates, to be precise.

He personally called Compaq’s CEO Eckhard Pfeiffer, speaking forcefully.

"Presenting the Navigator browser in the pre-installed system is an obligation of Compaq, as per our previous agreement," he said.

"That’s not a mandate, Gates. Compaq has the right to decide how its devices should appear when they reach the hands of the users," was the reply.

This policy was typical for Compaq; they opposed the practice of bundling application software with their computers.

Vice President Spike had publicly stated this position back in 1984, affirming Compaq’s opposition to such practices.

"We’ve considered it, and every time we do, we’ve rejected it.

I don’t believe in it, and our dealer network doesn’t think bundling is the best way to sell these products.

When you bundle software, you eliminate the real merchandise freedom for dealers, which many people see as a marketing gimmick.

You know, when you advertise a computer worth 3000 US dollars with free software valued at 3000 US dollars, it’s obviously not true."

Software should stick to its strengths and be supported, and so should hardware.

"Why limit the users to software that comes with the hardware? I think in the long run, it tends to suppress sales."

It was because of this business philosophy that Eckhard Pfeiffer greatly resented Gates’s commanding tone.

Compaq should be able to decide autonomously which software to bundle with its computers, rather than taking orders from Seattle.

"Eckhard Pfeiffer, Compaq must do this! Otherwise, Microsoft will stop licensing!"

With a snap, Gates hung up the phone.

Fuming with anger, he looked at the bare spot on the desktop of the Compaq computer in front of him, growing angrier by the minute.

Perhaps it was time to make an example, Microsoft needed to send a strong warning to other computer manufacturers.

Thus, three days later, Compaq received a threatening letter from Microsoft.

If they did not reinstall the Navigator browser on all of their impending computers,

Microsoft would terminate Compaq’s license to continue using the Windows operating system within 60 days!

After reading Microsoft’s reply, Eckhard Pfeiffer was shocked into silence for a long while.

What would happen to Compaq without the Windows operating system?

He dared not imagine the outcome; at this moment, all Eckhard Pfeiffer could feel was that Compaq’s throat, the very breath they relied on, was being strangled by Microsoft.

After hesitating briefly, he added a name to the email and then forwarded the reply.

Having done this, Eckhard Pfeiffer picked up the phone and dialed a number.

"Sorry, Dean, we have received a warning from Microsoft. Compaq’s computers must include the Navigator browser,

otherwise, they will stop licensing the Windows system, so Explorer will no longer be our only choice."

"OK, I understand," Dean responded quite calmly, "Did they hint at Netscape’s browser?"

"Not for the time being, the requirement Compaq received was to add Navigator back.

I just sent you an email; it might give you some hints."

"Thank you for your help, Mr. Pfeiffer, Netscape will not sit idly by." After expressing his gratitude, Dean hung up the phone.

He had already returned to Silicon Valley, having heard the rumors a few days prior.

At that time, Dean had a premonition that a storm was brewing.

"What did Compaq say?" Clark and Barksdale both looked over anxiously.

Dean opened his email, then turned the screen toward them.

Everyone in the office skimmed it quickly and began cursing vehemently.

"Despicable Microsoft, they’re nothing but robbers!"

"Honestly, given Gates’s character, I’m not the least bit surprised."

Different from the rest who were filled with righteous indignation, Dean furrowed his brows, deeply absorbed in thought.

"Dean, what are you thinking? Netscape must strike back!

If this goes on, Microsoft will only become more relentless and then drive us out of the browser market!"

Clark’s sense of crisis was almost maxed out; he hadn’t expected Microsoft to use the licensing of the Windows system as a threat.

Everyone here knew that no computer manufacturer could afford to ignore Microsoft’s threat.

"Gates is killing the chicken to scare the monkeys," Dean said in a low voice, making everyone pause, "He’s deliberately picked out Compaq, the dominant force in the computer market.

He’s warning all companies related to the computer network, if you don’t obey, Compaq will be your example."

If even the market leader had to bow down in submission to Microsoft, shouldn’t other companies weigh their decisions carefully?

"Dean..." Clark swallowed hard, "Netscape can’t just sit on its hands."

Dean didn’t reply; he was silently weighing his options.

"Honestly, I’d rather Microsoft took even more drastic measures."

"What?" His remark left everyone instinctively stunned.

"It’s too early to talk about this now," Dean shook his head, "Is all the evidence we’ve been collecting since ’95 ready?"

"We have all the evidence of Microsoft’s regulatory violations since then, including their monopolistic practices from earlier periods."

Barksdale was somewhat excited; was it time to take action?

"I have a feeling that things are going to get more interesting. So keep an eye on everything in Seattle, don’t miss any information.

As for this evidence, there will be a day when it will be useful, but it’s not now.

Because it’s not fatal enough yet!" A cold light flashed in Dean’s eyes.

Clark and the others looked at each other; Dean’s appetite seemed bigger than they had imagined.

Facing a behemoth like Microsoft, mere accusations of unfair competition, which are easily brushed off with a fine, would not do much.

No matter if the fine was one hundred million or a billion US dollars, Microsoft had the funds to cover it.

So one shouldn’t strike unless ready; but once the decision to act is made, it must be a fight to the death.

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