What does IE 5 bring to the table?

Just when the browser wars seemed to be coming to a close, the battlefield is undergoing a new seismic shift.

As Microsoft launches version 5 of its Internet Explorer browser today, it faces a competitive landscape significantly altered by legal, technological, and strategic developments.

On the legal front, the tactics that fueled its wildly successful assault on the browser market have gotten Microsoft into serious trouble in a federal antitrust trial. Technologically, IE has outstripped its rival, Netscape's Communicator browsing suite with the Navigator browser; but open source development could propel Communicator in its race to catch up.

Perhaps most importantly, IE's single largest customer, America Online, is on the verge of acquiring the competition.

Microsoft all but declared victory in the browser war after a September study showed Netscape slipping below majority status for the first time. Counting America Online-branded versions of IE, Explorer edged out Communicator by a hair, 43.8 percent to 41.5 percent.

But the browser market is not homogenous, and subsequent studies showed a wide fluctuation in share depending on which market is studied. For example, surveys from the same period showed Communicator not only still ahead but increasing its lead among corporate users. Still other analysts pointed out that if small businesses were counted, Navigator lagged behind.

The importance of the corporate market is underscored by Microsoft's aggressive courting of it.

NEW FEATURES

"Web Accessories": Lets third-party Web sites push content to separate pane

Related links: Shows related sites using Alexa Internet technology, a catch-up move to Navigator 4.06

Expanded search: Users can search range of categories from browser and customize search options

Radio bar: Allows users to adjust stations, volume while they surf

Hotmail integration: Heavily promoted and readily accessible throughout IE and Outlook Express

Autocompletion: Extended from address bar to Web forms, but watch your password!

IntelliSense: Expands content synchronization for offline browsing, plus other autocompletion and autocorrection features

History and favorites: Now manageable directly through browser pane

Faster and more stable: Microsoft claims, but analysts are backing them up

"Go" button: Helps Mom find your home page

Microsoft last week said that firms including Compaq Computer, Eli Lilly, Pfizer, and Ernst & Young were planning to use IE 5. Together those customer "wins" represent more than 300,000 desktops, according to Microsoft.

But Netscape has thrown a couple of massive monkey wrenches into the machinery of Microsoft's onslaught. The most recent of these, and most immediately relevant to market share, is its deal to be acquired by AOL.

AOL won't switch--yet
On announcing the acquisition, which involves a strategic alliance with Sun Microsystems, AOL chief executive Steve Case said that AOL would continue to use Internet Explorer as its client even after it owned Communicator. Case cited strategic reasons having to do with placement on the Windows desktop for that decision.

But analysts and others close to Netscape question that reasoning and cite other reasons for Case's decision to stick with IE--a decision they say is only temporary.

The first of these reasons is that Communicator still has some catching up to do by way of technology before AOL can use it. First, AOL can use IE since IE 3.0 has had a "componentized" architecture, meaning that third-party developers can build on individual components, for instance just the browsing engine. Communicator has componentization in its future, but not until version 5.0, which will be released toward the end of the year.

The second reason AOL does not want to immediately embrace Communicator, sources close to Netscape speculate, is that doing so would lend credence to Microsoft's argument in the antitrust trial against the company that the Internet market is fluid and Microsoft's competitive advantage is by no means assured. If AOL is going to take a sizeable chunk out of Microsoft's market share, this strategic scenario goes, it doesn't make sense to do so until after the government has concluded its case.

The third reason AOL is likely to keep IE for the foreseeable future is that the world's largest Internet service provider just last summer launched its massive campaign to get users to switch to AOL version 4.0. With a mostly low-tech constituency loathe to upgrade, AOL is unlikely to push a browser change sooner than absolutely necessary.