New Netscape strategy draws skepticism
Reuters Story - June 02, 1998 18:25
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By Andrea Orr
PALO ALTO, Calif., June 2 (Reuters) - Has the company that
was formed with a clear vision of how it could change the World
Wide Web -- and the world itself -- lost focus?
Netscape Communications Corp. has not given up the
battle for control of the Internet browser market. But it is
radically changed from the company that pioneered Internet
navigation tools and then went head-to-head with Microsoft
Corp. to dominate that business.
Netscape used to charge for its browsers, even though the
software could be downloaded for free. But today Netscape
literally gives away browsers and is working aggressively to
build new businesses that can generate cash flow.
And as it prepares to meet with financial analysts on
Thursday in San Francisco, there is skepticism over whether the
multipronged strategy can work.
As Forrester Research analyst John McCarthy put it, there
is a concern that Netscape is becoming a "jack of all trades,
but master of none."
Along with browsers, Netscape is expanding into so-called
enterprise software, and working to make its Netcenter Web site
(http://home.netscape.com) the gateway of choice into the
Internet for consumers and business users.
It has had some big successes.
In May, it entered a multimillion-dollar agreement to
collaborate on content and search services with Internet rival
Excite Inc. Excite on Tuesday announced the
collaboration had generated $21 million in advertising revenues
in its first month alone.
The companies are not saying how the revenues are divided.
Still, Netscape is up against a vast number of competitors
in both the enterprise software and the Internet service
market. And it is getting up to speed at a time many view it as
financially bruised from its browser wars.
Late last year, Netscape laid off 400 employees and in
January it reported its first quarterly loss. It rebounded last
month with a break-even first quarter that was better than most
forecasts.
But questions remained over the accounting maneuvers used
to achieve those results, and over the company's failure to
provide more details about the performance of its different
divisions.
"You've got a company with very limited assets, yet they're
trying to compete all over the map," said PaineWebber analyst
Jim Preissler. "They definitely have talented people and good
resources, but they may be spreading themselves way too thin."
One big question is the viability of the company's
enterprise software, a buzzword used to describe a vast array
of products from Internet messaging to the large systems that
allow internal communications within large corporations, or
between companies.
The market for enterprise software is huge, but the roster
of competitors reads like a Who's Who in technology, including
Novell Inc., International Business Machines
Corp. and Microsoft.
Last month Netscape announced what it called a major deal
to license its electronic commerce software to Citibank,
although it did not disclose the value of that deal.
"Citibank is a great customer, but you've got to see more
Citibanks stepping up to use (Netscape's platforms)," said Marc
Usem of Salomon Brothers.
Even Netscape's harshest critics give the company credit
for quickly regrouping as its browser business eroded.
"I've been critical of some changes, but part of that is
the lay of the land, and to not change is death," Usem
acknowledged.
Now, he says, Netscape needs to "make it clear, in as clear
terms as possible, exactly what their strategy is for their
Netcenter Web business."
Any confusion over Netcenter is not due to lack of trying
by Netscape. The company has been rapidly adding features like
free e-mail, customization and enhanced Web searching
capabilities in an effort to offer all the services found on
the big Internet "portals" like Excite, Yahoo Inc. ,
Infoseek Corp. and Lycos Inc.
"They're trying to look just like Yahoo," said Preissler,
who questioned whether the similarity between Web sites might
pose problems for a number of these services down the line.
"How the heck are they all trying to differentiate
themselves? Within one year, you're not going to be able to
tell one from the other." |
