How Internet Explorer 7 proves that competition is good

Internet Explorer 7 (IE7 or WIE) is being released today for those using Windows XP. But this was never supposed to happen. Back in 2003, Microsoft was planning destroying the market for browsers. So why now we have a new browser from Microsoft? Why did they change their master plan?

Just for reference, a browser is a program that allows us to browse all the information stored in the millions of computers that from the Internet. Without it there would be no way to see webpages, photos, news, etc.

In 1994, the first commercial browser, called Netscape appeared. In a proof of forward thinking, Microsoft thought that this thing of the Internet would never be interesting to users. In July 1995 they released their own browser. That was the beginning of the Browser Wars, which finished around 2002 when more than 95% of browsers were IE.

Then Microsoft took the decision of not releasing any other stand-alone version of IE. From 1995 to 2003, six versions of IE had been released, including some updates and minor improvements. Today is the marks of the first release since then. This means that there has not been any improvement in the browser for 3 years. And nobody can think there was no room for improvement.

Today, IE7 is released. Why is there need for a new one now?

The ashes of Netscape gave birth to a new non-for-profit organisation that released a new browser called Firefox, in September 2004. It was introducing many innovations such as tabbed browsing, pop-up block, search box, the extremely useful extensions, and a download manager. Its use started to grow to the extent that somebody in Microsoft started to get worried.

Then the original plan of not releasing any other IE, and totally integrating it in the next version of Windows, called Vista, was dropped. Today we see the results of that. A brand new IE that includes many of the innovations of Firefox, like tabbed browsing, and other interesting solutions.

If Firefox had never appeared, if the users hadn’t switched to look for the new features it was offering, IE7 with its innovations would have never happened. While Microsoft was enjoying a monopoly situation there was no point to improve, it was a one man race. When a new racer appeared at the end of the street IE had to start running. And it is indeed running! And this is much better for all of us. You can add some excitement by downloading Firefox 1.5 for free and the new IE7 and choosing your favourite. Oh, and just wait couple of months to see the much promising release of the new Firefox 2.0.

Free newspapers in London make sense

The new London free afternoon newspapers have been around for some weeks now. Not by chance, they were launched within days of difference. If in Economics everything is rational, what is rational in giving away your product. And why not simply put a price? Is everybody getting mad?

It is a normal situation throughout Europe in the last years: you arrive to the underground, the train station or get out of it and find your free copy of the morning paper. London is no exception about it, but now, there are also two free papers in the evening, invading the market of the traditional London evening paper, the Evening Standard.

How is it possible that two newspapers, with its costs of paper, printing, computers and above all journalists, can survive giving it for free? The answer is in the Internet. Sites like Google are making vasts amounts of money out of advertising. The idea is that while we are browsing the Internet or reading our newspaper, we see the advert, and then the brand or the product gets “exposure”, meaning that we now know it and are likely to buy it. Luckily for us, advertisers do not know about “ad-blindness”, according to which we have got so used to adverts that our eyes do not see them. Do not ask me to tell you one advert in the paper two minutes after I have binned it. I have no idea.

This is how thelondonpaper has made itself a place in London. Its contents are quite similar to the Evening Standard, the traditional evening London newspaper, with the only difference that you have to pay to get the latter.

A couple of days afte the launch of thelondonpaper, another free paper appeared in the London afternoons. It was delivered by the very same way, by an army of youngsters shouting “free newspaper” at almost every corner, but its approach to news is less serious, creating a differentiated product. The name was London Lite, and were edited by the same company of the Evening Standard.

Some people compare business strategy with war strategy. I can imagine the editors of the Evening Standard with the fresh news on the table that Rupert Murdoch’s company, also editor of the Sun, was planning to launch a free paper that was clearly targeting their evening paper. So they decided to strike back cutting the supplies of the opposite site and forcing them to desist.

It’s been said before that the free paper survives thanks to advertising. The more people see the advert the more exposure the brand gets, and the company is willing to pay more. If there is a second free paper, which also gives a different content, people will prefer one rather than the other. Hence, the readers will be splitted, the exposure will diminish and so will the price advertisers willing to pay. If the income from adverts is not enough to cover the costs, thelondonpaper will have to desist, and the hill of the evening market will have again only one king.

While this explanation might make sense, there is still one loose issue which is that, if London Lite tries to squeeze the profitability of the free afternoon newspapers, then it can not survive itself: the siege is also cutting their supplies. That is true, unless they are happy to run losses. And they could do that by subsidising it with the profits of other newspapers (they are getting supplies through a secret tunnel). Which is a strategy that Rupert Murdoch’s can also follow if his objective is breaking the Evening Standard dominance… Who will be the king of the hill?