Microsoft's deal to invest in Apple Computer and make Internet Explorer the default browser in the Macintosh OS is expected to deeply affect two key players in the Internet market: Netscape and Sun.
The Microsoft-Apple accord is seen by some industry observers as the latest in a string of events that will ultimately diminish Netscape's Internet influence during the next few years.
The deal is also expected to hurt the so-called Java coalition - led by Sun and including Netscape, IBM, and Oracle - that is counting on the ubiquity of Netscape's Web client to drive demand for its object model.
Among Netscape's troubles: Microsoft continues to eat up browser market share; Web-development emphasis is shifting away from HTML to Java and ActiveX; and a ticked-off IBM/Lotus is pressuring Netscape to rethink its client-bundling strategy.
"Because of the fast pace of the Internet market, you have to be very good at executing. What concerns me about Netscape is they seem to be losing that superiority in execution," says Nina Lytton, editor of Crossroads A-List, an industry-tracking newsletter, in Boston.
The Apple deal gives Microsoft another platform from which to use Explorer to push ActiveX and its distributed object model over Java, CORBA, and the Internet Inter-ORB Protocol (IIOP) jointly embraced by the Netscape, Sun, IBM, and Oracle group. Or, if users insist on Java, Microsoft is in a stronger position to promote its version of the programming language over Sun's 100% Pure Java brand.
This spells trouble for Netscape and Sun's Java coalition.
"IBM, Sun, and Netscape all desperately need the Netscape browser with the Java run time and the Visigenic ORB distributed across every desktop, because that lays the foundation for the open-standards, portable-desktop model that can be driven by the back-end applications," says Tim Sloane, an analyst at the Aberdeen Group, in Boston.
The Microsoft-Apple deal also will let Microsoft steal more eyeballs - and advertising dollars - from browsers prewired to point to its MSN and Web content sites just when Netscape has said that it's counting on advertising revenues to boost earnings.
In the past, Netscape outlived other gloomy prophesies and held up well under Microsoft's constant Internet client and server assault, says Ezra Gottheil, an analyst at the Hurwitz Group, in Newton, Massachusetts.
But Netscape now faces increased competition from its own partners, according to a new report from the Aberdeen Group.
That report predicts that although HTML will retain its role as a broad-based content viewer, Java will eventually displace HTML as a Web-application interface because it's more sophisticated and also more akin to the client/server model that developers are familiar with. But although Netscape is the leader in HTML, it trails Sun and IBM in Java deployment, having only recently fully embraced Java at its June developer's conference.
One user agreed with the report's assertions.
"I see a need and a benefit for both HTML and Java, but Java seems to be the more sophisticated tool, so we will probably be looking at supporting both," says Don Berk, vice president and head of product management at Northern Trust, a Chicago-based multibank holding company. "From the [Java] perspective, Netscape probably hasn't been as forward-thinking as Sun and IBM."
Moreover, although the Java coalition needs Netscape's Web client to succeed, Lotus and IBM - two key Netscape distributors - have demonstrated that they won't necessarily support Netscape at the expense of their own products.
IBM says it will no longer package Netscape with Lotus Notes, instead inking a deal with Microsoft for Internet Explorer. Also, Netscape will soon succumb to IBM's pressure to unbundle the Navigator browser from its Communicator Web groupware suite, several sources say.
But although that unbundling may appease IBM and Lotus, it could hurt Netscape's server sales while boosting Microsoft's.
"It's certainly a concession on Netscape's part from its strategy to provide a comprehensive groupware suite on the desktop, which if it had worked, would have been a much bigger problem for Microsoft," Gottheil says.
"They [Microsoft] would have had a heck of a time saying they would provide all these things for free and defending themselves against antitrust accusations," Gottheil says.
• Despite its Web browsers and server success, Netscape has difficulty reaching large corporate accounts with infra-structure products such as mail, directory, and security.
• Sun's Java is leveling the Internet playing field by diluting Netscape's domination of Internet standards and reducing other suppliers' time-to-market challenges.
• Netscape has weak programs for corporate and independent software developers.
Source: Aberdeen Group