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Netscape strategy questioned

The company is in danger of losing its hard-won presence in Fortune 1,000 corporations, according to a market research firm.

Netscape Communications (NSCP) is in danger of losing its hard-won presence in Fortune 1,000 corporations, according to a white paper released today by the Aberdeen Group, a market research firm.

Netscape responded forcefully to the report, citing growing adoption of its tools and applications in the enterprise sector. Last month, the company announced that 200 organizations have deployed Netscape software for 500 or more users.

Since its inception, the Internet software company has succeeded in establishing a beachhead in corporate accounts on the strength of its Navigator browser and its SuiteSpot servers. But Netscape's decision to expand the functions of both client and server and to compete with partners such as IBM could damage the company's attempts to become a Fortune 1,000 mainstay, the Aberdeen report stated.

"When they announced the repackaging of SuiteSpot [servers] last month, they made it clear to their partners they would enter into the directory, groupware, mail, and security environments and would bundle them all with their infrastructure," said Tim Sloan, Aberdeen's director of research for Internet infrastructure.

Those partners with their large installed bases have been instrumental in distributing Netscape's products to corporate accounts, Sloan added, but it's unclear whether they'll continue to help the new kid on the block as strongly as before.

Danny Shader, Netscape vice president of industry and developer relations, countered that the company's relationship with its partners--especially Sun Microsystems, IBM, and Oracle--is under no such stress, even in cases where Netscape competes directly, such as with the Notes groupware of IBM subsidiary Lotus Development.

"We're very competitive with Lotus, but IBM is a large organization," Shader said, pointing to other initiatives, such as JavaBeans and CORBA, on which the two companies are working together. He would not comment on published reports that Lotus wants Netscape to unbundle the Navigator browser from the rest of Communicator, the other features of which go head-to-head with Lotus Notes.

Aberdeen's Sloan also said Netscape's leadership in establishing Internet standards with its products is under fire from Sun's Java language.

"The center has shifted," Sloan said. "Java is now the center of the Web development platform, and Sun has control with its '100 percent pure' program. There's not a lot of core business functions in Java yet, but it's definitely where developers are focusing their energies."

Sloan conducted his interviews over a month ago and didn't have time to take into account any possible effect of Microsoft's recent efforts to discount Java as a development platform.

Again, Shader felt Sloan's report was off the mark. "We are firmly committed to Java," he said. "We're even rewriting products in Java and relying on it to address our own cross-platform development requirements. Our development platform assumes Java for its success."

Sloan acknowledged that Netscape partners aren't likely to narrow their support of Netscape's client products, which represent the best hope of fending off Microsoft's attempt to integrate its Windows operating system and Internet software.

The report's third criticism of Netscape's strategy centered on the company's developer relations. Sloan said interviewees liked the ease and speed with which they could implement Netscape's back-end products, but they expressed concern about the products' scalability, security, and reliability in mission-critical environments.

Such corporate developers are either using or considering Netscape tools to make long-standing corporate data, often stored on mainframes and other large systems, available to users over networks and front-end software based on Internet standards.

Shader cited numerous agreements Netscape has made with enterprise application vendors to make its products available. "Enterprise applications are connected to us and vice versa," he said.

"Corporations today have their crown jewels wrapped up in enterprise applications, and they're depending on us to help bring [that data] to their end users and partners. The realities in the field don't bear out what's being speculated about," he added.

Sloan said that the signs of trouble for Netscape appeared over several months and "hundreds" of conversations but that the report focuses specifically on interviews with IT executives in 25 Fortune 1,000 companies.