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Patience key to Netscape strategy

Netscape makes a good move by creating software for non-PC devices, but analysts say the seed may take a long time to bear fruit.

Netscape Communications has probably made a good move by creating software for television set-top boxes, video game players, Network Computers, and other consumers electronics devices. But industry analysts say the seed planted today may take a long time to bear fruit.

As reported by CNET last week, Netscape today announced that it will become a key investor in a start-up company called Navio. The venture, which will create versions of Navigator for all non-PC platforms, will include partnerships with several companies, including Sony, Nintendo, IBM, and NEC, Oracle, and Sega.

Like Netscape, consumer electronics companies are hoping that users will want Net access from products that are considerably cheaper and easier to use than PCs. Everyone is hurrying to make their electronics devices Net-savvy sooner rather than later, all afraid that the next big wave will arrive before they're ready--something of an "if you build it, they will come" strategy.

"They're not sure when consumers are going to want Internet access from their devices, but they'd be foolish to not have the technology relationships and technology in place," said Tim Bajarin, president of Creative Strategies, a consultancy based in San Jose, California. "This is positioning and posturing, but it's also setting in motion a very significant statement."

Netscape in particular wants to be perceived as ahead the game. It thinks the market has huge potential, as almost all American households have at least one TV set while only about one-third have PCs. Netscape is betting that a good portion of this truly mass market will start surfing the Net on their television sets by connecting devices like the Sony Playstation game box to TVs, and it wants them to be using Navigator as their browser, just as the majority of PC users do now.

"The Internet is going to be the electricity to consumer devices for the next century," said Wei Yen, CEO of Navio and former Silicon Graphics executive. Navio chairman and Netscape head Jim Clark added: "You can think of Navio as going where the PC cannot or is not likely to go for interface reasons, price reasons, or form-factor reasons."

Not insignificantly, yesterday's announcement gives Netscape something to focus on where it's not head-to-head with Microsoft. At least not yet.

By establishing itself for devices outside the PC market, Netscape hopes to get the jump on its browser archrival. Netscape of late has been struggling to outmaneuver Microsoft in the PC market because the Redmond, Washington, giant is still dominant in PC operating systems. Netscape faces better odds of getting out early and dominating the market for non-PC devices, where Microsoft has less of a built-in advantage.

The first products based on Navio browsers are expected to be available next year. To sell those product, Netscape will try to leverage its brand name in the new company's marketing, but there are still plenty of technology hurdles to clear before Navigator can be pushed as a browser for TVs as well as PCs, such as making text and visuals on TVs as easy to read as on computer monitors. Netscape provided few details today on how they will address this problem.

Netscape will also not be alone in the non-PC browser market; the company will find itself competing with manufacturers of proprietary TV-surfing devices such as Viewcall, WebTV, and, eventually, Microsoft.

Observers of Netscape's strategy believe that the company is making its move none too soon. "We think it's about time that Netscape begins paying attention to this market," said Joe Gillach, chief operations officer of Diba, which plans to make Internet devices for television sets.

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