IE actually did win on the merits back then, IE 3 was a far better browser than Netscape at the time and Netscape was having a tough time competing due to the shape the codebase was in. IE was quicker and lighter, so people started using it. The bundling was certainly a factor, but the fact that IE was the better browser for a time cannot be ignored.
I may have my version numbers mixed up, it's been a while and I was relying on memory so it very well could have been 4. The point though was there was a point in which IE was clearly out in front of Netscape.