Barksdale:  It actually was a quote at the end of a very long road show when we were taking Netscape public, a trip through Europe that ended in London. It was our last show and we were in a big hurry to get the plane. We were at the Savoy Hotel, and the ballroom was full of all these British investment bankers, and we give our normal pitch. Peter Currie, our CFO, and I were doing it, and I said, “All right, one last question.” And this fellow, he says something about, “How do you know that Microsoft isn’t just going to bundle a browser into their product?”


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HBR: Bundling and unbundling have been around probably as long as businesses have been around, but especially at the level of how you present a product to the consumer, whether you’re getting a whole bunch of things like you do with cable TV, or whether you’re buying a song at a time, it just seems like the digital changes we’ve been going through over the past 20 years have really made this a key strategic decision for a lot of companies, right?

Barksdale:  It’s easier to do in the digital age. It’s easier to bundle and unbundle digital products than it was previously hard products.

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Bundles of any time start coming together — like Marc says, I think now because it’s technologically so much easier to do — until they either tip over from their own weight or the consumer says, “I would rather have piece parts than the bundle.”

If you remember the big hue and cry in the ’90s was, “I have to buy the whole CD to get one track, that’s not fair.” And so, once Napster came out with its track-by-track download system, you had this big wave of people that went to it because it seemed so easy and attractive. The fact that it was free and illegal didn’t seem to bother them too much.

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Oracle is an example. Larry [Ellison] has spoken openly about his attempt to basically recreate IBM by adding applications and services and hardware to what had been an infrastructure software business. And so, ironically, even the people who take down an incumbent through unbundling then come back and try to do the rebundle.

Barksdale:  Well, because it’s an effective growth strategy. Once you try to grow the business, it’s an easier out to stay focused on your core and then add things to it. And you become a big bundle again.

Andreessen: Which then creates a new vulnerability that you didn’t have when you were the insurgent.

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You can kind of think about the evolution of the internet industry this way, right? Once upon a time, there was AOL, which bundled everything from dialup to all the information services that you use, all in one thing. And then Yahoo came along and unbundled all the content from the access. And then one of the features of Yahoo was search, Google came along and unbundled search. One of the things you could do on Google was search for people; Facebook gave people a much better way to search for other people.

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How to Succeed in Business by Bundling – and Unbundling