Not only are each of the five items Lawrence lists "old news," but they ignore some other news the investment community may not be aware of:
1. In the browser market, Microsoft is the monkey. Netscape is the gorilla. To put it in terms everyone who hasn't read "Inside The Tornado" can understand, Microsoft might be considered the Advanced Micro Devices of the browser market while Netscape is Intel. By that, I don't mean to denigrate IE, which has come a long way. But IE is still essentially a knock-off of Navigator (albeit with different "look"). So far, IMHO, Microsoft's browser strategy is a flop. Even in GIVING AWAY the product IE has only about a 7% market share, if my memory serves.
2. In the server market, the market leader at something like 30% is Apache, a freeware product, followed by NSCA, another freeware product. Netscape is a Chimp here, focusing on serving the corporate intranet market. Microsoft appears, with its IIS product to be a monkey, trying to steal opportunistic share away from Netscape. With Normandy, Microsoft may be trying to position itself as a chimp in the market segment directed to on line services.
Netscape has its work cut out for it, in setting up a tornado in the server market while also fending off Microsoft. I think the freeware products will eventually fall away, leaving Microsoft and Netscape to duke it out. Right now, Netscape has the lead in its effort to become the next gorilla in the server market. As a basis for starting a new tornado in Micrsoft's favor, IIS is, in my opinion, a flop, a totally reactive product. Normandy may or may not be the same. It is too early to say. If they market it towards large users and on-line services and offer a truly superior alternative for those users' needs, then they have a chance.
3. Although we know a lot about Microsoft's plans for integration of the browser into the Win 97 interface as "part of the operating system," we have heard NOTHING about Netscape's next step. When I was at the annual meeting, I specifically asked Jim Barksdale what he thought of what Microsoft is doing. He did not specifically lay out Netscape's strategy, but he also did not seem too concerned. I think they may have something up their sleeve, which they have not disclosed.
4. It appears that Netscape is trying to turn the internet (or corporate intranet) itself in to a new platform which would displace Microsoft's windows franchise. So far, Microsoft has not really done much that is proactive to address that threat. What they have done are a some strictly defensive maneuvers accompanied by a lot of hype.
The bottom line is that all the good news for Microsoft and bad news for Netscape appears to be out. Microsoft's internet strategy appears to be about 95% reactive and mayby 5% pro-active, which is a step up from about 3 months ago when it was 100% reactive and defensive. We still have not seen Netscape's next move, so the good news about Netscape and bad news for Microsoft is not out yet.
Of course, this is all just my personal opinion with no inside knowledge, and maybe I'm wrong. Maybe Barksdale and the others at Netscape are just sitting on their behinds doing nothing while Microsoft executes its defensive strategy. If you think that is the case, go ahead and short the stock. |
