Is there no escape for Netscape?

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Is there no escape for Netscape?

By Richard Morochove

First published February 19, 1998

Is there no escape for Netscape Communications Corp.? The once high-flying developer of Internet software is facing stormy weather. It's squeezed between hurricane Bill on one side and the tornados changing the Internet on the other.

Although Netscape posted record revenues of $534 million (U.S.) last year, it lost money and announced a restructuring plan to trim about 300 employees from its roster. The company's stock now sells for less than half the price it fetched last summer.

Will Netscape survive?

As Netscape reorganizes, there's good news for Internet users. Faced with increasing competition from Microsoft's Internet Explorer Web browser, Netscape now matches Microsoft on price. Both Netscape Navigator and Communicator Standard Edition 4.0 are now available for free downloading.

The move to stop charging for browser software will have little impact on Netscape's revenues, which now comes largely from server software and support services. The browser software was already free to educational and non-profit users. Others could download the software for a 90-day free trial. It isn't clear how many later paid for their "trialware."

Netscape will also allow software developers access to the source code of version 5.0 of Communicator, expected to be released by the end of March. This will make it easier for other programmers to develop add-ons and enhanced versions of the browser.

Yet I wonder why it took Netscape this long to turn its Web browser into a freebie to match competition from Microsoft. It was apparent a year and a half ago that Microsoft's freely-distributed Internet Explorer was gaining ground on Navigator.

I suspect the answer lies in a lack of communications. For a company with "communications" in its name, Netscape does far too little of it.

While Netscape chairman Jim Clark, president Jim Barksdale and co-founder Marc Andreessen may know what they're planning, they don't effectively communicate their ideas throughout the company.

During a tour of Netscape's campus last year I listened as a senior VP, who bragged he had joined the company four months after it formed, delivered a presentation in the Mozilla room on Netscape's global growth.

I asked, "What's Netscape's position on Internet push technology?"

He couldn't answer. He promised to have a specialist contact me. No one did. A public relations person promised to add me to a news release mailing list. I'm still waiting for my first release.

It may not be important that I'm kept up to date on Netscape's efforts, but surely its vice-presidents should be informed.

This might not matter if Netscape didn't compete against a master of communications, Microsoft.

The Redmond-based software giant spends a great deal of time and effort ensuring all its employees understand what it's doing and where it's going. I suspected I could ask any Microsoft product manager, even one not involved in the Internet, about the company's view of push technology and receive a cogent reply. I later did just that and wasn't disappointed.

Netscape Communications is like a boat where the navigator knows where he's going, but the uncoordinated hands row in all directions.

Yet I think Netscape has too many attractive assets to sink without a trace. Most likely, it will be taken over by a larger company with more financial resources.

If you believe all the scuttlebutt, there's no shortage of suitors. Sun Microsystems Inc., Oracle Corp., IBM Corp. and America Online Inc. are all rumoured to be on Netscape's dance card.

Netscape is one of the biggest boosters of Java technology, so it could be attractive to Java's owner, Sun Microsystems. Yet Sun has never made a large software acquisition. Furthermore, Sun CEO Scott McNealy appeared to ridicule these acquisition rumours last week. In a speech to a Silicon Valley club, McNealy included "Sun Considers Buying Netscape" in a list of the top ten marijuana-induced fantasies.

Larry Ellison, CEO of Oracle, the world's second largest independent software company, is always on the lookout for new ways to give Bill Gates heartburn. A revitalized Netscape would give Ellison a strategic platform to battle Microsoft in the Internet arena. Coincidentally, Netscape's Internet server technology could fit nicely with Oracle's database and Network Computer strategies.

IBM's acquisition of Lotus Development two and a half years was a great success. The financial stability and enormous sales force of Big Blue allowed Lotus to add staff and initiate more software development projects. There's overlap between Lotus and Netscape in the Internet server software and Notes groupware business. But this could make Netscape a more attractive acquisition for IBM, provided it leaps over regulatory hurdles.

Netscape's software is still the most widely-used for Web browsing, and it's configured to direct users to its site for help using the program and accessing Internet information. The company recently redesigned its site so it's more of a one-stop-shop for Internet information, while in the past it focussed on Netscape's products.

America Online must be attracted by Netscape's Web presence, which usually tops the lists of the most frequently visited Web sites. CW

Richard Morochove, FCA, is a Toronto-based computer consultant.

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