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Netscape frees up browser
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January 22, 1998: 4:01 p.m. ET
After weeks of speculation, company announces giveaway to hike usage
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NEW YORK (CNNfn) - After seeing its share of the Web browser market shrink to around 60 percent, Netscape Communications Corp. Thursday confirmed it will offer its Communicator Internet suite and Navigator browser for free.
The company said it was making the move in hopes of driving up sales of its SuiteSpot Web server, browser upgrades and support packages.
More importantly, say analysts, Thursday's move ensures there will always be competition in the browser market.
"These new products and services will enable customers to leverage our free client software to gain universal access to rich content and applications on corporate intranets, extranets and the public Internet," said Mike Homer, Netscape's executive vice president of worldwide sales and marketing.
While Netscape may have taken a while to implement the policy, analysts applauded the decision, which they say will make the browser an open platform for development.
"I think it's a very creative move. They were being pushed by a lot of parties, starting with Microsoft, to make the browser free," says Kathryn Hale, an analyst at market research firm Dataquest.
"If they had [only] said it was free, that would be admitting defeat on Microsoft's terms. They're attacking on another front. By making the source code available, which is what Microsoft can never do, they're trying to change the rules of the game. They've said they stand for openness, and this is putting their money where their mouth is," she said.
Hale added that the decision will challenge thousands of developers to come up with new possibilities for the browser.
Although individuals won't be able to charge for the modified products they make, software companies that incorporate the browser into their products may make sweeping improvements, she said.
"Symantec might incorporate it and create a desktop environment for developers that is different from [Microsoft's] active desktop. It's now a free platform from which others can attack Microsoft's operating system," said Hale.
Netscape is currently embroiled in a bitter battle with Microsoft Corp. (MSFT) for control of the browser market. Netscape's once-commanding lead of the software that allows computer users to navigate the Internet has quickly evaporated as Microsoft has poured billions of dollars into its Internet efforts.
Microsoft's efforts prompted Netscape to complain last year to the Justice Department. In October, the government filed suit against Microsoft, accusing the company of antitrust violations. On Thursday, the Justice Department and Microsoft announced a partial settlement.
Earlier this month, Netscape (NSCP) warned it could cut up to 400 contract and full-time workers from its payroll as part of a broad restructuring that will be outlined Jan. 27. The necessity to tighten its belt in light of the market share decrease was widely believed to be behind the move.
Current Communicator users will be able to purchase server products and subscriptions at discounts.
The company also said it was lowering the prices on enhanced versions of Netscape Communicator. The retail version will now be available for $19.95 after rebate, Communicator Deluxe will retail for $39.95 after rebate, Netscape Publishing Suite will now cost $49.95 after rebate and the Communicator professional edition will be available for $29. The publishing suite has enhanced capabilities for creating Web pages
Netscape is also adding a premium service area to its Netcenter website that will allow subscribers to access personalized content and give them discounts on products. Netscape will also allow users to publish websites on its servers for a fee.
Dataquest's Hale said the challenge for Netscape will be to replace the revenue that will be lost through the price cuts.
"Their stand-alone browser goes to zero and the corporate version from $79 to $29. That's a huge revenue hit that they will have to make up with server sales," she said.
One thing the announcement will do, Hale said, is quiet speculation that Netscape might disappear soon. "This distracts that line of thinking. The question of their long-term viability becomes less important," she said.
-- by staff writer Cyrus Afzali
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