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RealNames’ Termination: More Catastrophic than Anticipated!

Microsoft is a special company. By definition, its operating systems and Internet browser are no longer just “applications;” they constitute a platform. They are - for 90 percent of Internet users - the sole interface to all Internet content and services. The browser is its own little monopoly. Such is its dominance that Microsoft has the power of life and death over innovation.

Whereas the rest of us say the Internet changes everything, for Microsoft, this can be translated as “The browser changes everything”. In the era of the desktop and the local area network, the operating system was the key to owning the platform. But in the Internet era, the browser is the key to owning the platform.

So it is that Internet Explorer has become a very special application that 90% of users use exclusively for Internet navigation, content and services. Rather than thinking narrowly about this or that feature of an application, Microsoft should be thinking broadly about the application’s role as a conduit for Internet usage.

Strangely, Microsoft has given control over the browser’s key component - the browser address bar - to MSN. And not just to MSN, but to MSN Search. The thinking is that the address bar is simply an entry point into a back-end repository of content and that MSN Search runs the indexes of that content. Therefore, the address bar should be owned by MSN Search. The MSN Search Engine is - in that respect - middleware to the browser, which itself is part of the operating system.

The product managers for MSN Search therefore control the browser’s behavior from a user point of view.

On May 7, product managers at MSN Search explained to RealNames Corporation that starting June 28, the sole middleware accessible from the browser address bar would be MSN Search results. RealNames would be discontinued at the end of the current contract period.

For RealNames, this was catastrophic.

* It meant we had to close the company and lay off 83 employees - this despite three successive quarters of revenue growth and positive cash flow in Q1 on a $20 million plus run rate.

* It meant that in non-English character countries, where RealNames is the only way to natively use the local language as a Web addressing language in the browser, entire languages will get switched off.

* It meant users will no longer be able to type in well-known brands like “Princess Barbie” and arrive at the right home page. Instead, Microsoft will deliver an interstitial page from MSN Search no matter what is typed in the browser.

* It meant that RealNames’ nine country registries [country managers] and more than 100 registrars [resellers] were themselves put into difficult circumstances - and in some cases, face possible closure.

It is even more catastrophic for others, like my mum, who do not understand URLs. But she does know she can type “IBM ThinkPad” into her browser to access that Web page at ibm.com. For her, the browser just works. From June 29, unless the service can continue in some way, it will appear broken.

Typing into the browser any natural language input [words, phrases etc,] a user will get back an MSN generated interstitial page. In this one feature change Microsoft has turned the browser from a conduit for a new layer of simple naming into an exclusive conduit for MSN Search results. And it has turned back the clock of progress and innovation. Type “Treo 270” and today you will go to Handspring’s page for that product. From June 29th you will get an MSN search page.

Every brand on the planet is being switched off and replaced with MSN Search results in the name of a better user experience. The monopoly that is the browser is now exclusively tied to MSN content for every natural language input to the browser address bar. And that was more than 500 million inputs between January and March 2002 and growing by 15% a month.

An MSN product manager can explain why this is a good thing. It is good because he has control over his MSN Search product - total control, but he cannot control the naming platform. Microsoft has no ability to edit every name sold by thousands of companies around the world. Therefore, it has no control.

A product manager’s worst nightmare is to have no control over his product. Secondly, the world—or at least the Liberty Alliance—doesn’t want Microsoft to have control. Witness the Passport debate. So the solution is obvious, get rid of the feature; replace it with one we control. Nirvana!

In this one decision Microsoft has triggered the death of RealNames, and possibly, many companies that are part of the RealNames ecosystem, not to mention all non-English languages as Internet addresses. The browser is so powerful that it can kill an entire market - the keyword market - in one decision.

By Keith Teare, Principal

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