Over the weekend, the US press was buzzing with allegations that Microsoft had tried to carve up the Internet client market through a deal with Netscape. This would, according to the ?Wall Street Journal?, have given Netscape free rein in the browser market, as long as it left the Windows platform to its giant rival. Microsoft denies the claims and Netscape is keeping quiet - but it still presents one of those great ?might have beens? of the IT industry. It is hard not to wonder whether, leaving ethics aside, Netscape could have benefited from such an agreement. After all, shortly after the alleged conversations took place, Microsoft launched its first all-out offensive in the browser market with Internet Explorer and, despite the best efforts of the US antitrust authorities, has forced its competitor to move away from the browser that made its name and put its trust in a wider product range and far more speculative waters.
Even if Microsoft is forced to unbundle Internet Explorer completely from Windows 95 and 98, this is still a make or break year for Netscape. No longer a much feted start-up, but a major software house trying to get up with the big boys, it has recently adopted some dramatic strategies to keep in the race.
Last year, it seemed to be relying chiefly on political alliances with larger allies, notably Oracle, IBM and Sun in the anti-Microsoft, pro-Java network computer movement. This year, it has come up with ideas of its own - but the jury is still out on whether they will make Netscape a real software major, or a company that is ripe for acquisition by one of its giant allies.
Netscape?s new moves fall into five categories - opening up its technology; Internet services such as email and Net connection; search engine moves that will turn Netscape into a media company; working on a new generation of browser based products; and corporate software such as electronic commerce.
If Microsoft can spread its technology to become de facto standards on the back of Windows? dominance, Netscape hopes to do it in a way that it claims it truer to the spirit of the Internet - by giving away elements for free and encouraging third party input into future developments.
Netscape executive vice president Mike Homer claimed this week that the market share of the Navigator browser had grown slightly since the company started giving it away for free, bucking a sharp trend in IE?s favour.
More radically, Netscape has set up an organisation called Mozilla to create and guide a community of developers working on Navigator sourcecode. Initially, most of these are Netscape employees, but the company expects more and more outsiders to get involved in accelerating improvements to Navigator and fighting off IE. More than 10,000 developers have downloaded the sourcecode from the Mozilla Web site since it was launched this month, and already new security and parsing features have been added to the browser. Netscape claims the process nets a far wider range of good ideas for future versions and opens bugs up to many more testers, making them more likely to be detected. Of course, such an approach also cuts Netscape?s own R&D overheads.
But not all observers are convinced that the open sourcecode model will work for Netscape, particularly in the large corporate market it has targeted. ?It?s fine for the Internet teccie community, but corporates won?t trust it,? said an IT director at a major pharmaceutical company.
The Mozilla model is a common one among Internet communities. The most famous open sourcecode example is Linux, a freeware version of Unix much downloaded by Net users, which Netscape co-founder Marc Andreesen has recently touted repeatedly as a serious corporate operating system. It has set a precedent for ?companies giving away a product for free to get something back?, which will change the face of the software industry, he told the Massachusetts Software Council recently.
But corporate fears about his model include loss of control of the development, particularly of the spread of viruses and bad development practices. And such a model could actually slow time to market by introducing too many new features to be reviewed and incorporated.
Analysts at Forrester Research believe Netscape is in danger of derailing the Mozilla effort. ?Contributions will be made to Mozilla only if developers trust that their work will become part of the permanent code base and have a long life? - but this will not happen, predicts Forrester, as long as Netscape retains its branded, paid-for browser environment, Communicator. To make Communicator competitive against Microsoft in the corporate world, it needs to be tightly controlled, and that means separating its development from Mozilla, analyst Ted Schadler believes. But ?the code base, once split, will not be reunited. Mozilla and Communicator will follow different development paths and developers will shun Mozilla?. But the alternative, to brand Mozilla as the core corporate product, would be an ?uncontrolled development strategy that would be too scary for Netscape to stick to?, Schadler believes.
Communicator, so far, is receiving all the juiciest new features aimed at corporate use. Communicator 5.0 will offer a new user interface that gives a single view of all data in applications or the Web, and will extend the word processing capabilities included in the Composer element. Like Microsoft with upcoming IE versions, Communicator will focus on customised features for individual users, and integrating Internet data with desktop apps.
Netscape?s search and media ambitions also focus on extending the functionality of a browser based system and providing users with more customisation. Chief executive Jim Barksdale said last week that he wants Netscape to become a ?media company? providing content as well as tools for the Web. This is part of a major counter-offensive against Microsoft, which Barksdale outlined on a European tour last week. Initially it will focus on beefing up the company?s Netcenter Web site and renegotiating the contracts it has with the four main search engine providers, Lycos, Yahoo, Infoseek and Excite.
The first new feature within Netcenter will be a free email service and other enhancements will follow, the aim being to make the site the most popular gateway or portal to the Net in the world, within a year - an ambition Microsoft is also pursuing with plans to completely rework its home page and separate it from its paid-for service, MSN.
Like Microsoft, Netscape plans to be a channel for content - as much of it exclusive as possible - from partners, rather than becoming a content provider, which reduces the risk and investment of this new departure. There is a significant risk involved, however, in changing the deals Netscape has with the search engines. The presence of these engines within Navigator and Communicator generates more traffic than any other feature, and millions of dollars in fees to Netscape. But now it may seek to create its own search engine, possibly by acquiring one of the four main suppliers or doing an exclusive deal with it. In turn, the search specialists are seeing a diminishing percentage of their revenues coming via Netscape as they turn to value added services such as personalisation, and may set out to lure surfers directly to their own home pages.
But while analysts from investment house Hambrecht & Quist praised Netscape?s strategy, claiming Netcenter was ideally placed to leverage new business, observers at Forrester Research are more sceptical. ?Netscape is heading for schizophrenia,? said senior analyst Jim Nail, who thinks the company will spread itself too thinly by trying to do content as well as core technology. Other analysts believe it is too late into the race and lacks the necessary skills tp make Netcenter into a full service portal like Yahoo. Yahoo attracts more traffic than any other site - 30 million visits per month - and Netscape?s Mike Homer has pledged to beat this and make Netcenter number one within a year.
There is also a feeling among some observers that Netscape is not sure which of several attractive markets to focus on - and may end up not satisfying any of them. Although it recently ruled out chasing the popular SME space, focusing on larger companies, it still lacks the corporate credibility enjoyed by more established software houses, especially when it comes to strategic software such as application servers and electronic commerce applications.
Then, on the media side, it is targeting the mass surfer market that Yahoo knows so well. And it is also focusing on an emerging group of customers that it calls ?enterprise service providers? - IT departments that work like ISPs, offering Net access services and hosted applications such as email within their own organisations, for a fee. Existing products such as Application Server and Suitespot will fall into this category as will new ones such as the email initiatives.
Netscape will also focus on traditional ISPs and telcos with its email server products, including Trooper ISP, which is a version tailored for this market, currently in beta.
The breadth of the new offerings in Netscape?s labs, and the extent of its ambitions are impressive. But for a company that still lacks established corporate links, or high profile outside the browser base, it is taking massive risks in its drive to score against Microsoft. Department of Justice judgements may help its traditional flagship products to compete on a level playing field, but in its other areas, it needs to convince a dauntingly wide range of customers on the basis of merit alone.
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