the street.com had some good comments on nscp--can they deliver the eyeballs. i have patients @ yhoo but none at nscp and don't know if they can lite a fire under barksdale's ass..read below
Commentary Features: Netscape Still Has a Chance
By Kevin Kelleher
Special to TheStreet.com
1/26/98 12:10 PM ET
Don't give up on Netscape (NSCP:Nasdaq) yet.
Certainly grim portents surround the Internet darling. The company is forsaking a good chunk of revenues from its Communicator and Navigator browsers, the price of which dropped from $30 to nothing in a single day Thursday. Brokerage firms have roundly downgraded the Internet software company. Its stock trades at a shade below 18 -- a far cry from its 52-week high of 49 1/2 reached last July.
Nestcape argues that by giving its product away for free it can recapture its lost Internet magic. Clearly the firm is losing ground. Its share of the browser market has shrunk from about 85% to roughly 55% as Microsoft (MSFT:Nasdaq) has steadily carved away at Netscape with its improving Explorer browser, which holds about 35% of the Internet browser market.
But investors shouldn't underestimate the opportunity before Netscape. For one, it doesn't look like things can get a whole lot worse. And in the swiftly moving currents of the Internet, opportunities for resuscitation abound. Right now, the Internet is all about software -- the industry darlings are Yahoo! (YHOO:Nasdaq) and America Online (AOL:NYSE), which don't write content, but the code that makes it easy to reach. As a rule, software develops overnight, maturing as fast as the creatures in the Alien movies. Content ages like wine. But the two are meshing. They need each other to thrive.
In the software world, code-writers are slamming out new innovations all the time, but after a certain point, it all becomes frill and overkill. Look at the browsers: Months after Netscape and Internet Explorer released their very fancy 4.0 releases, many people are still using the 3.0 versions. While the upgrades have cool features like dynamic HTML, these are overshadowed by the downsides: IE 4.0 takes over your desktop and Netscape's 4.0 browser is slower than 3.0, a huge drag. And all the bells and whistles around push technology that both put into their 4.0s have failed to capture a big audience.
What a browser really does is act as a physical medium, like the paper in a newspaper or the tuner of a radio. There are only so many innovations you can add to the paper that news is printed on. Media companies compete instead by concentrating on the quality of the content printed on it. And that's what's starting to happen to the Internet media. There will be innovations to browsers as bandwidth increases, but the basics of how browsers work have been decided. Increasingly, the most important factor in a browser's market share will be its ability to deliver better content.
Take a look at the most frequented sites on the Web. The busiest? Netscape, and it has been for a while. Lots of people enter the Web by clicking on those directory buttons at the top of the browser, which take them to Netscape's site, which hooks them into Netscape's servers, which pump out an ad for one of Netscape's advertisers, which gladly pay Netscape an incremental fee for such valued real estate.
To see how Netscape can more than make up the lost browser revenues, look at the four next most popular sites: Yahoo!, Excite (XCIT:Nasdaq), Microsoft and DEC's (DEC:NYSE) AltaVista. Three of those companies are in the sometimes-profitable business of bringing surfers to content and bringing content to surfers. The fourth -- Microsoft -- is up there because it's playing the same game as Netscape with its IE browser, although not as well as Netscape. Going down the list, you find less prominent search engines such as Lycos (LCOS:Nasdaq) and Infoseek (SEEK:Nasdaq) and big content names like Time Warner (TWX:NYSE) and Disney (DIS:NYSE).
What's going on here has been getting clearer and clearer in recent months: As in the gold rush celebrating its 150th anniversary this year, the people profiting from the Web aren't the ones doing all the work -- it's the middlemen, the people selling tools, who make it all happen. Netscape's golden niche isn't in browser revenues, it's in bringing the content and the eyeballs together. It's becoming the Net equivalent of a publisher or broadcast network. It's in taking on AOL as much as it is in taking on Microsoft.
As for the Microsoft front, things are looking up for Netscape. After all, it has just been handed its best chance ever of getting its software bundled into computers. Microsoft settled contempt charges with the Department of Justice, agreeing to unbundle IE from Windows and opening the door for Netscape. Now is Netscape's time to build relationships with PC makers: If Microsoft doesn't let it play on the swing set, the DoJ will be able to argue that the Redmond bully is acting in bad faith.
The Unlimited Download campaign Netscape launched Thursday along with its free browser -- it lets PC makers and Internet service providers download and redistribute its software with "no strings attached" -- is a good first move. And the company's decision to open up browser source code will allow PC makers to tinker with the browser and create a distinctive browser for their PCs, instead of offering the same version of IE that everyone else has. But Netscape still has a lot of jockeying and schmoozing to do. Microsoft won't give up IE's market share easily.
So in the coming weeks, here are two things to watch and see if Netscape does:
Play Microsoft's game in a very visible way to get its browser bundled and iconned in as many desktop computers as possible.
Stop ignoring its chance to become a major Net media player and start taking market share away from major content entry points like Yahoo! and AOL.
Those actions may be a matter of life and death for the onetime Internet darling. If Netscape fails on both counts, it's time to look elsewhere. |
