Netscape's grand strategy

Executives outline the company's future, hoping for synergy with three businesses: enterprise, e-commerce, and Netcenter.

Tech Industry

SAN FRANCISCO--Netscape executives today outlined their vision for the company's future, describing hoped-for synergies in its three disparate businesses: enterprise software, e-commerce software, and its popular Netcenter Web site.

In presentations that at times sounded like mea culpas for Netscape's past strategic shifts, cofounder Marc Andreessen, CEO Jim Barksdale, and Netcenter chief Mike Homer outlined plans to link its e-commerce software business with its Web site by sending some of its 7 million daily Netcenter visitors to commerce sites built with Netscape software.

"The enterprise software business and the portal service business are coming together," Barksdale said. "This convergence is where the best opportunities are based. Netscape has some unique competitive advantages that come from being in these two businesses at the outset of this convergence.

"We call it the flash point, the takeoff for the Net economy," he added.

But the company provided very few examples of how Netscape can generate new revenue from these separate businesses, a key requirement since Netscape earlier this year decided to give away its Web browsers and the source code behind them for free.

Andreessen pointed to the Travelocity site, built with Netscape technology and promoted with links from Netscape's home age. Homer hinted that Citibank, which signed a high-profile, $20 million-plus contract for e-commerce software, would be a key contributor to the financial services Netscape plans to host on its site.

Analysts declared that the company's e-commerce message was compelling, but they stressed that the proof would be in the execution.

"It was the most cohesive message I've heard from them in '98," said Daniel Rimer, analyst with Hambrecht & Quist. "They demonstrated convincingly that they've broken free from reliance on the browser revenue. Now they have to show how they can capitalize off the advantage they have in browser market share and integrate their server software, e-commerce, and browser businesses."

Rimer noted that many large Internet companies still prefer to use homegrown solutions, citing Amazon.com, which uses certain Netscape products but not the integrated solution Netscape hopes to sell.

But Netscape might get its foot in the door with one product, then sell an integrated strategy further down the line.

"Their strategy is very innovative in that they're not trying to go directly up against competitors," said Phil Schacter, analyst with the Burton Group. "Instead, they're going into a company like Ford, which already uses Novell NetWare for their intranet, and sell Ford their e-commerce solution. Then, Ford may find later that Netscape is the right one to host the intranet too."

One cloud on Netscape's horizon is the upcoming integration of Microsoft's Internet Explorer browser with its Windows 98 operating system. Netscape's once-overwhelming lead in browser market share has fallen to just over 50 percent in recent months.

Homer today said browser market share has stabilized as a result of both the Justice Department's antitrust actions against Microsoft and Netscape's own decision to give away its browser and the source code behind it.

How much will Windows 98's release hurt Navigator? "We're going to have to wait a while before we really can find out," Rimer said. "There's always a lag between bundling and deployment. But it could have a pretty significant impact."

Netscape is embarking on integration of its own, strengthening links between Navigator browsing technologies and Netcenter services.

"This means that users are always one click away from Netcenter," Homer said. Personalization services on Netcenter will let "My Netscape" users visit a personalized home page as their start page.

Homer outlined a series of new Netcenter services for both consumers and business users. In future telecommunications offerings, users could sign up for long distance phone deals online, get billed and pay those bills from Netscape's site, and Netscape would collect a lucrative finders' fee.

In financial services, the company plans to add online billing services, branded credit and corporate procurement cards, and an expanded membership program. In addition, it says it will let members store their address book and personal financial data on Netscape's site.

"We aren't going to do content--there isn't a Netscape Studios," Homer said, alluding to America Online's content efforts. Instead, Netcenter is partnering with information providers in 17 categories, doing deals in areas it deems strategic--computing, business, news, and sports, among others--and relying on partner Excite for other content.

Homer also reiterated Netscape plans to host online trading communities where companies could get good prices on office supplies, computers, and industrial materials.

Overall, the message from today's briefing was that four-year-old Netscape is a grown-up now, ready to play in the mission-critical software arena for customers that need innovative software that can scale to huge numbers of users.

Andreessen pointed to Netscape's consulting force of 300 and growing relationships with Andersen Consulting and other systems integrators.

But Dataquest analyst Alan Weiner said that in the consulting arena, Netscape still lacks the years of experience and goodwill with corporate customers that established consulting firms have nurtured over decades.

In its enterprise emphasis, Andreessen added Netscape is running into competitors like IBM, Sun Microsystems, and, of course Microsoft.

Andreessen placed groupware--where Netscape in the past made a major effort--as an area no longer of interest to the company. Also largely outside Netscape's current emphasis: small and mid-sized businesses and desktop software for mass markets.

In other news at the event, Netscape announced the following:

  • It will launch its first broad-based ad campaign, using success stories of its customers.

  • The company signed a deal with Sun for one-stop support for both Sun and Netscape products on the Solaris platform.

  • Netscape said 25 software developers are now supporting its application server.

  • Close
    Drag
    Autoplay: ON Autoplay: OFF