Netscape: Twice born

Few enough of us ever get to help change the world, to even once be in the right place when a paradigm shifts. Jim Barksdale thinks Netscape Communications can do it twice. According to its new vision, Netscape will mine the convergence of enterprise software and the portal business. 'We are no longer the browser company,' he says.

Few enough of us ever get to help change the world, to even once be in the right place when a paradigm shifts. Jim Barksdale thinks Netscape Communications can do it twice.

Netscape Navigator was not the first graphical Web browser, but it was the one which brought the Internet to the world. Navigator's technical momentum was driven in part by Netscape's unprecedented business model.

That model allowed a company with little enough in the way of bricks and mortar at home, let alone abroad, to achieve a commanding share of a new global market, within months rather than years.

The idea of giving away new software to anyone who wanted it was, apocryphally, so alien to Microsoft CEO Bill Gates that when a Microsoft staff member told Gates he'd have to do the same, Gates called him a communist.

Nonetheless, Captain Gates brought around the great ship Microsoft and played the new game so well that Netscape's days in the Web browser business seemed limited. Given that Netscape's razors-and-blades model depended on browser share to drive server sales, the prognosis was poor.

"We are no longer the browser company," Barksdale tells a group of sceptical journalists in Melbourne - one place in the world where the company does have some bricks, mortar and bodies.

According to the new vision, Netscape will mine the convergence of enterprise software and the portal business. Businesses, especially large ones, will need both infrastructure, courtesy of Netscape's enterprise software and services, and the access to customers and partners offered by portal services, including, but not only Netscape's Netcenter Web site.

The traffic through Netcenter is, like the market penetration of the Navigator and Communicator browsers, a legacy of its old business. Netscape got one of the world's most popular Web sites because that URL was set in every new browser as a home page. And the people kept coming back because first software than other services were available through the site.

In Netscape's recent unexpectedly healthy Q3 result, its enterprise business pulled in $US111.6 million, most of that in product sales. Netcenter made $US38.7 million, so it too, is a very viable business. But do the two really mix?

The fact that the Barksdale's new convergence seems to be forming in the image of Netscape itself might give rise to some scepticism. It might even be perilous - might not such tying of one business to the other simply, for instance, drive every other portal provider to the opposition?

But, in what Barksdale describes as " possibly the largest enterprise software deal ever done", Netscape has set up a whale of a test case with the New York-based Citibank. The portal part of the deal, which sees Citibank as a permanent presence on Netcenter, was actually worth more than the enterprise software and services component.

"Citibank's objective by 2010 is to have a billion customers," says Barksdale. "So how do you get a billion customers? Well, they just bought and merged with the Travellers' Insurance Company and that's 100 million they're at now. They have to grow one order of magnitude and they've got 12 years to do it.

"The only way they can see of doing it is to get out of the brick and mortar mindset and get out on to the Internet and meet customers, service customers when they get out of high school all the way to their funerals. Like General Motors used to promote itself with the marketing campaign 'marry 'em in a Chevrolet and bury 'em in a Cadillac.

"In the new age, brick and mortar assets are no longer of value. We've all heard the story of Amazon.com. It now actually has a higher market capitalisation than the two largest retailers of books in the US. One of those retailers, Barnes and Noble, has a billion dollars in brick and mortar assets - yet its stockholders give them no value, because the world has changed.

"That's the advantage for Amazon.com. It can make people think they have 3 million volumes of books right there on their shelves in Seattle. Well, guess what? They don't. They don't have to carry those books.

"They're like Michael Dell - they have no inventory. You, as the buyer don't care. They've created the impression of enormous content and enormous inventory."

Other businesses, says Barkdale, "will want to do in virtual space what they've been doing for 200 years in the real world, and they want to do it as economically as possible.

"If I'm in business, I want to work with my trading partners, my vendors, my suppliers, my channels and marketing associates, my sales groups, my bank, my transportation company, my credit card company and my customers all in an online world. I want to do everything I can in the real world."

But, contends Barksdale, businesses will not want to do it all themselves. He foresees transaction portals "... where you do business between businesses. You outsource it if you're a business, you don't necessarily have to build all the content yourself, or meet all the customers or do all the billing. We'll do that for you."

Well, Netscape and a new breed of ESPs will. That's enterprise service providers.

"They have the same look and feel as big ISPs or telcos, in terms of 24-hour availability, scalability, millions of users. You never know how many customers you're going to run into in a day on the Internet - maybe two, maybe two million.

The Internet has radically changed the old service bureau mentality of outsourcing, he says, "where it was a very punishing thing for applications to be moved outside your business. Today, it's not nearly as risky or as hard."

He believes Netscape is well position to offer those kinds of services, "in a market that really isn't owned by anybody today.

It might all seem to be drawing too long a bow for a company which didn't exist five years ago, were it not for the fact that Netscape has started to win the big deals. Not just CitiBank, but for Telstra and the Internet back end of Singapore NETS e-commerce system. The company is making a little money too. And, not least, both Netscape and its CEO have been this way before.

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