Microsoft's size has been an asset in its browser battle with Netscape, but that very size could lead to its undoing, according to an International Data analyst speaking today at IDC Japan's annual computer industry briefing.
In a presentation entitled "Can Netscape Break Microsoft's Stranglehold?" David Card, director of new media research at IDC/Link, says that while the software giant has many advantages over its smaller rival, it runs the risk of spreading itself too thin.
"They're trying to maintain their position in the desktop market, they're trying to get into the enterprise market, they're trying to launch the Microsoft Network and they're trying to make content and they're trying to turn themselves into a TV network," he says. "How much bandwidth and money do they have?"
Money is something Microsoft appears not to be lacking. Earlier this week (see Microsoft earnings)it reported earnings of US$614 million on revenues of US$2.3 billion for its first quarter and says it expects strong revenues through the next two quarters as well. It is prepared to inject some of that money into new and upgraded products, with plans to spend US$2.1 billion in that area in the current fiscal year. And the Internet is a significant area of focus for the Redmond, Washington, company.
Still, the move into content and services is a far stretch from Microsoft's mainstay business of building tools and platforms, Card says. "There is a fundamental contradiction in that, and Microsoft's very successful business model may be under stress," he says.
Netscape may be better able to focus on the market for Web browsers and servers since it isn't burdened by the extra baggage that Microsoft must carry, Card says. For example, in the quarter just ended, the Mountain View, California, company spun off Navio Communications, an independent Internet software developer focusing on the network appliance market,
But while Microsoft may be trying to squeeze to much into the company as a whole, Netscape is doing the same on the browser level by positioning its Navigator browser as a feature-rich application platform, Card says.
That approach will face a tough challenge from Microsoft in coming months when the company ships Explorer 4.0 and the latest version of its Office suite, which will feature embedded browser functionality, he says.
But Netscape, too, has the money to spend on its products. Yesterday it announced US$7.7 million in earnings on US$100 million (see Netscape revenues soar) in revenue for its third quarter -- far below Microsoft's levels, but way up from the losses it reported for the same period a year ago.
Both companies released version 3.0 of their respective browsers in the quarter.