Netscape blares browser reports

In the wake of several setbacks for its market share, Netscape trumpets two studies showing that it's still the leader in browsers.

Paul Festa Staff Writer, CNET News.com
Paul Festa
covers browser development and Web standards.
Paul Festa
4 min read
In the wake of several setbacks this week, Netscape Communications (NSCP) is trumpeting two studies that it says show the company is the clear leader in the Web browser market, but industry analysts say the strongest challenge from rival Microsoft (MSFT) has yet to come.

In a press release today, Netscape described what it called "tremendous momentum and strong market share" for its Communicator suite, which includes the Navigator 4.0 browser. The press release cited a June telephone survey by IntelliQuest that reported 73 percent of Internet users used Navigator at home, at work, or at school.

Netscape also cited a study by Computer Intelligence showing the software company with more than 70 percent of the corporate browser market. But that study referred to the number of browsers installed as of January 1, more than five months before Communicator shipped.

"A January 1 market share number is almost a year old," said Mark Nelson, vice president of Computer Intelligence. "It's two years old in Internet years. So many new users are coming onto the Internet that the potential for browser market share to change quickly is very high. That's the trouble with a market share number that hasn't been collected last week or the week before."

Ever since Netscape's growth has soared with the explosion of the Internet, it has been able to maintain dominance over the browser market despite the occasional prediction of its demise. But Internet Explorer, Microsoft's answer to Navigator, has been able to make steady gains, rising from obscurity to roughly 30 percent of the browser market in only two years.

And the real test still lies ahead, as Microsoft continues to reap the benefits of its massive marketing power and alliances it has made to bundle its Internet software with PCs across the board. Moreover, like Netscape, it is developing cutting-edge push technologies that could eventually supersede many functions of today's browsers.

"I think Microsoft can drive their market share to 60 percent over the next 12 months and relegate Netscape to the No. 2 spot," said Richard Scocozza, equity analyst with Brown Brothers Harriman.

It has not been the best of weeks for Netscape. Yesterday, KPMG Peat Marwick announced it would create a consulting group devoted to Microsoft standards and technology, pulling out 18,000 Navigator seats and a SuiteSpot back-end system. The day before, as industry watchers were surprised by Microsoft's $150 million investment in Apple Computer, Internet Explorer became the "default" browser for future versions of Macintosh operating systems.

Other recent high-profile defections to IE include Intuit and IBM subsidiary Lotus, which will use the browser with their respective software suites. Earlier this year, Chevron, which until March had been one of Netscape's biggest corporate customers with 25,000 desktops, made the move to Explorer.

Microsoft, citing external and internal reports, places its market share at about 30 percent but does not break that number down into corporate, home, and educational uses. Netscape, by contrast, claims to have more than 90 percent of the educational market.

According to preliminary figures for the first quarter of 1997 released by Dataquest, Microsoft is gaining on Netscape. In a little more than two years, IE has surged from a tiny fraction of the browser market to 31 percent. Netscape, meanwhile, has slid from a commanding 80 percent to 65 percent.

Browser market share
  "helvetica"="" size="-1" color="#CC0000">1995 1996 Q1 1997
Netscape 80.1% 73.5% 65%
"helvetica"="" size="-1"> Microsoft 2.9% 20.6% 31%
Source: Dataquest

Netscape's recent setbacks are expected to solidify that trend. "The [Apple] agreement reinforces the fact that Microsoft is gaining on them and will continue to gain," Scocozza said. "I wouldn't be too happy about this if I were Netscape."

But Netscape spokeswoman Jennifer O'Mahony downplayed the importance of the Apple agreement. "Microsoft does not have a good track record with Mac users," she noted, citing late software shipments and products with fewer features.

Nelson said his company showed Apple users making up 22 percent of Netscape's installed base in the corporate market. He said that though the Apple-Microsoft pact could have an effect on both corporate and overall market share, the key was in the hands of Apple users. "Whether they'll switch or not is hard to know. Apple users are an independent bunch."

Nelson also pointed out that the number of new Apple shipments with the default IE browser was small compared to the number of currently installed machines. "It doesn't add up to a whole lot until you get a few years down the road."

Scocozza conceded that the Apple announcement in itself would not topple Netscape from its No. 1 position. "From a purely economic standpoint, Netscape is not going to take any major hit. But in terms of visibility in the marketplace and establishing momentum, it may be that Netscape is losing. The psychological ramifications are much more important than the economic ones."

Microsoft minimized the importance of its agreement with Apple in its browser battle with Netscape. IE product manager Kevin Unangst said his company had seen a steady increase in market share numbers since the introduction of IE 3.0. He claimed that companies such as Intuit and Lotus have switched to IE because it lets developers add functionality from the browser to their own applications.

"Users choose a product because they like it better," Unangst said, "not just because it's easier to get."