Netscape: The blazing star comes down to earth

In less than three years, Netscape has grown from a one-product browser vendor to an Internet software company with more than 15 products. Once the blazing star of the Internet industry, Netscape now finds that its stellar growth is bringing substantial challenge. Critics doubt that it has the product breadth, company maturity and infrastructure to battle with other Internet software vendors. Quentin Gallivan, Netscape's president of sales for Asia Pacific, is based in Mountain View, California - and this is the full-length Andrea Malcolm interview with him on which this week's Computerworld story is based

In less than three years Netscape has grown from a one-product browser vendor to an Internet software company with more than 15 products. Once the blazing star of the Internet industry, Netscape now finds that its stellar growth is bringing substantial challenge. Critics doubt that it has the product breadth, company maturity and infrastructure to battle with other Internet software vendors.

Quentin Gallivan Netscape's president of sales for Asia-Pacific based in Mountain View, California, spoke to Computerworld New Zealand about how the company has changed, where it is heading and challenges it faces.

What is Netscape's target market?

There are three market segments - intranet/Internet; Internet/commerce; and Internet/consumer and we're aiming at all three.

In the Internet/consumer space we're of course looking at access with the old Internet browser. And we've also become a priority stake holder in a company called Navio - taking the Netscape browser and porting it to non-PC devices such as web TVs, set top boxes, Internet telephones, PDAs, and gaming devices. We recently did a joint venture between Navio and Oracle's NCI division.

On the intranet/Internet front, Netscape's main mission is to build client/server software aimed at the very fast growing Internet based groupware market. That's where our main product development is with Netscape Communicator and our servers.

On the Internet/commerce side, Netscape has formed a joint venture company called Actra with GE Information Services, the EDI company. Actra is building open Internet protocol software for consumer to business and business to business transactions over the Internet.

Until now companies have linked to their suppliers and customers through proprietary networks and systems. By doing it through the Internet, for the first time this can happen at a low cost on a large scale. We've also got Netscape Netcaster - our push technology.

Which product is your biggest revenue earner?

The company was founded with one product and even a year ago we only had three - a browser and two servers. Now we have a new client [Communicator] that has a browser and six other intranet/Internet rich features and 12 servers. So there's obviously been a big investment on the server side.

We've had a significant change from being very browser dependent a year ago, which is good because Microsoft offer a free browser. Last quarter 38% of our revenue came from servers with browsers providing about 40% and the rest coming from services and support.

Which product is your most strategic?

There's no one product as such. The most strategic thing we're doing is developing to an open network platform - supporting all the Internet protocols.

Application development in Java and the integration of object oriented programming are also very strategic. The big thing is integration because while companies love the productivity that they get on open Internet technology, the real benefits come when they link that to legacy systems - into their manufacturing, human resource or financial consolidation system. So its the adoption of CORBA and IOP, object oriented transaction routing, and the development of integration tools that we're investing a lot of time and energy in.

If you're going to talk about open systems, why does Netscape not support Microsoft's ActiveX?

We do support ActiveX at the API level because a lot of our customers have asked us to. On the other hand we see Java, CORBA and IOP as where the industry - apart from Microsoft - is going. The world is heterogeneous and every customer I've ever talked to has a mixture of technology.

What is the predominant platform that Netscape products run on?

We develop on Sun but then we quickly port to HP-UX, IBM AIX, and Windows NT - NT is huge. Our cross platform approach is critical because that's a real differentiator between Microsoft and us - they only work on one platform. However, it takes time and money to port to all the other platforms. Once we're developing in 100% pure Java then we'll only have to write a product once. So in terms of development were trying to go as fast as we can to 100% pure Java and Java Beans which is the component module of Java.

If we get 100% pure Java and applications can run on anything, what then will differentiate the OS and hardware vendors?

That's a good question. Have you asked Microsoft that?

They say we will never get true cross platform applications because at the end of the day the vendors have to make a dollar and won't want to lose their differentiation.

The world is moving towards network-centric computing and the Internet and intranets are really where companies are getting major productivity benefits and that's where they're betting their technology dollar. But the operating system will continue to be an important function in terms of file and print and those sorts of things. In terms of the application, the operating system will become less relevant because we'll have software that runs across any operating system. Then we'll developing components, using Java Beans, which you can re-use across all operating systems.

That's Utopia, that's what everyone wants but how will computer companies make money? Why buy my platform when you can run all the same applications on everybody else's platform?

Companies will differentiate their hardware and operating systems by performance, scalability and services. Some applications require high scalability such as heavy transaction processing. Others such as mail and newsgroup applications require less. Computer companies will differentiate themselves by offering the best fit. Also many of the large hardware companies will continue to differentiate on services - look at IBM and how fast their services business is growing. Unisys is another example, particularly in systems integration.

Netscape has many partners, some of which offer competing products. How do you persuade those partners to introduce your products to their corporate customers? I'm thinking of the likes of IBM and Novell.

As long as customers are committed to open standards and as long as the vendors are building to that then its best of breed. You can mix and match and let the customer choose. That's different to the Microsoft model, which is all or nothing. We have many partners, which bundle or integrate our browsers with their web client. Take IBM - our web servers are a big part of how they go to market. Yet Lotus Notes, which is probably our major competitor, is part of IBM. However it remains that IBM is probably one our closest partners.

So for us it's not that you have to have all Netscape products. Our game is that as long as you have open standards, the customer will decide who provides the best component piece of the solution.

You have been criticised for your decision not to unbundle Netscape Navigator from Communicator, causing Lotus to bundle Microsoft's Internet Explorer with Domino. Are there any plans to unbundle Navigator?

No comment. What I can say is Netscape recognises the value of components and modularisation and all I can say is we're moving in that direction.

So that decision could change?

When we built Communicator it was really built to address the intranet need and it has very rich features for a client/server solution. But it's also a great tool for browsing the Internet, doing HTML and all those things. So the design was always to have a more modular architecture. When we will implement that, I'm not able to say at this point.

(Note: Four days after this interview, Netscape announced that it would be unbundling Navigator from Communicator.)

Because Netscape has grown so quickly, do you find you're still perceived as merely a browser company?

The good news is we are building world class products. Our biggest challenge is building the marketing and sales infrastructure and we're running as fast as we can to address that. In Australasia the hiring of Julian Quinn was a great coup for us because we were able to bring in a general manager who understood the software industry, network technology, channels, and marketing. So the big challenge for Netscape is not at Mountain View developing product. It's actually in the field.

It's usually the marketing that is ahead of the product. In our case the products are there and shipping and it's the marketing and sales that is a bit behind.

IDC just released figures a fortnight ago which show that Netscape has 85% market share in the Internet and intranet server space. And a subset of that study showed that in the Internet mail space Netscape had 50% share. Microsoft had 17% share and Lotus had 4% share. So the momentum is moving. Companies are moving very quickly from proprietary groupware to Internet based groupware. One of Jim Barksdale's objectives, in building key reference accounts was to have 200 what he called "design wins" a known company which had purchased more than 500 seats of Netscape email and groupware. We actually had 240 designs in the first half of this year so we exceeded our goal. In totality I think that's well in excess of 2 million seats added in the first half of this year.

This brings me to a recent report by the US research company the Aberdeen Group that says Netscape is losing market share. What is your response?

Well I've just given you the most recent figures from IDC. I'm not aware of the Aberdeen Group. Who are they? IDC says 85% market share and Aberdeen says we're losing. I don't know, who do you believe?

How big is Netscape in Australia and New Zealand?

We're headquartered in Melbourne and in less than 12 months we have built up 24 people and we're expanding. We have a full complement of marketing, sales and support and have fully established a distribution channel. Comtech is our distributor in New Zealand.

Will you set up an office in New Zealand?

In next six to 12 months you'll probably see a more direct presence.

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