By Peggy Watt
Network World, 4/27/98

Gunslingers - the biggest and baddest Microsoft Corp. among them - are bearing down fast on the intranet frontier to which Netscape Communications Corp. staked claim barely three years ago with the first commercial Web browser and server.

Fending off those encroaching on its corporate territory has Netscape trying various weapons, including a new browser strategy, a stronger server lineup and better support programs. But the bullets have only begun flying, and it's not clear whether Netscape has loaded its holster with enough to stave off enemy advances or whether customers like the company's new tactics.

One thing is for certain: Netscape is not shying away from this intranet showdown. In fact, much of the industry is still talking about its recent surprise attack.

That's when Netscape, aiming squarely at Microsoft and its strategy of giving away the Internet Explorer browser to gain entrance to the corporate intranet, made Navigator a freebie. And, one-upping its nemesis, Netscape announced plans to release the source code for its latest browser, Communicator 5.0. Netscape's decision to forego browser revenue is striking in light of the negative financial situation the company found itself in late last year. Netscape lost $88 million in the quarter that ended in December 1997. Those fourth-quarter figures contributed to a net loss for the year of $116 million, even though 1997 revenue was up 54% from 1996.

The decision also clearly tells us that this battle is not about the browser anymore. Netscape won't break down sales, but analysts estimate that two-thirds of Netscape's revenue comes from server sales. Servers really aren't a new entry - Netscape shipped the Commerce and Communications servers along with Navigator in 1994 - but we'll likely see more attention focused on them. Netscape, in fact, attributed much of its poor showing in late 1997 to the $56.3 million one-time cost of acquiring server makers Actra Business Systems LLC and Kiva Software Corp.

The application and transaction-processing servers Netscape gained through the acquisitions strengthen the company's server lineup. Despite the financial drain, those purchases were good decisions, analysts say.

Netscape's server complement includes Enterprise Server, Collabra workgroup server, Directory Server, Messaging Server, Proxy Server and Certificate Server. It also offers the FastTrack Web server, often licensed by resellers.

This server spread may help Netscape right itself. Early market research indicates Netscape has boosted server sales in the past year, and that ought to help the bottom line. Netscape is under big pressure to show profit in these early quarters of 1998.

And if servers are really the silver bullet now, that makes the browser source code availability delivered as part of Netscape's one-two punch really more a matter of fanfare. Sure, source code access means unprecedented customization options, but it probably won't do much to lure intranet managers into the Netscape camp.

Corporate developers who want to customize Navigator or Communicator already can do so with Netscape's year-old Mission Control Desktop tool kit (see Intranet Handbook, January, page 10). But enterprise customers will benefit from more capable, robust versions of Communicator, says Michael LaGuardia, a Netscape product manager with mozilla.org, the team charged with stewardship of the client source code. Independent software vendors (ISV) and system integrators, which Netscape also desperately needs on its side during the intranet showdown, will more often participate in the co-op development offered through mozilla.org. Offering source code goes further than the Client Customization Kit, a free tool set Internet service providers, OEMs and Internet content providers have been using to customize Navigator and Communicator client software.

Developers using the newly available source code are asked to feed suggestions and modifications to Netscape, which expects to incorporate some of the mozilla.org recommendations into the commercial product. We'll see; the code went up on the World Wide Web only this month.

While Netscape plays with browser pricing and source code, it's also learning how to better handle Navigator and Communicator during negotiations for enterprise intranet and extranet business - installations accounting for 80% of the company's business, says John Paul, senior vice president and general manager of Netscape's server products division.

Paul recalls watching a chief information officer pressure Netscape President and CEO Jim Barksdale during negotiations for a $2.5 million deal. The customer pointed out that Microsoft would supply Internet Explorer free. "Fine," Barksdale said, "our client is free to you." The customer still licensed $2.5 million in Netscape software and services, but didn't have to justify paying for a browser.

Netscape needs more of that kind of deal, IT managers suggest.

"Netscape has to be aggressively defensive,'' says Forrest Jerome, director of technology information systems at Colgate-Palmolive Co., in Piscataway, N.J. "Netscape has to form some relationships that are visible to the world. It can't just throw the code over the walls of Mountain View and expect people to pick it up. It has to work with other companies to craft something exceptional.''

Perhaps, as some suggest, Netscape doesn't publicize or leverage its partnerships enough. The company has deals with a number of sizable allies. Most notable include developing JavaScript with Sun Microsystems, Inc., and the Navio Communications, Inc. and Network Computer, Inc. joint ventures with Oracle Corp. Other partners include Hewlett-Packard Co., Sybase, Inc., and Novell, Inc. Even IBM, a competitor with its Domino Web servers from Lotus Development Corp., has a license to resell Navigator and some servers.

Those partnerships are crucial for technological and marketing opportunities. One IT manager noticed that Netscape is grooming employees in enterprise strategy and drawing support talent from Lotus and Oracle, which are more familiar with the enterprise than the company's 'Net heads.

Netscape's traditional audience has been fairly technical, but the company needs to remember that "it's not just talking with the Unix guys anymore,'' says Joan-Carol Brigham, a Frisco, Colo.-based research manager with International Data Corp.

Enterprise customers differ from Unix gurus in that they really need commitment, stability and support - attributes Netscape is learning to deliver.

For Navigator customer Informix Software, Inc., better support was overdue. While beta-testing Navigator 4 last spring, Informix had problems and needed technical support, but Netscape didn't respond adequately, says Ricardo Cole, project manager at Informix, in Menlo Park, Calif. "But the relationship has definitely changed, and today we get immediate response,'' he adds.

Cole credits the browser wars with improving Netscape's service. If Netscape wants to maintain its stance in the enterprise market, such solid business practices are crucial. Netscape is looking down the barrel of an incredibly powerful gun, the bullets from which it may never be able to dodge nimbly enough. Microsoft's weapon is its bundling power, and IT managers deal with it repeatedly.

One IT manager who fought his supervisor's budget-backed urging to switch from Navigator to Internet Explorer remembers ruefully the last time Microsoft slid in and took over desktops inside his company. The firm had chosen Adobe Systems Corp.'s Persuasion as its presentation design package. IT trained scores of users, who cranked out Persuasion charts and slide shows.

But Microsoft slid PowerPoint into the corporation as a freebie bundled with Word and Excel, also corporate standards. Especially in remote offices and foreign sites, IT couldn't keep tabs on users loading all of the Microsoft Office suite, and PowerPoint files began popping up. The problem was, Persuasion couldn't read PowerPoint files. Economics won, and now the company standard is PowerPoint - and IT is unhappily converting archives of Persuasion files.

The IT manager fears the same will happen on the internal Web, and even has an inkling of where and how. Microsoft is working with SAP AG, a business management and accounting software vendor. SAP is advising some customers that its new Web-based versions rely on an implementation of the ActiveX technology Microsoft uses in its Internet Information Server and Internet Explorer products.

"I've installed and trained more than 1,000 people in Navigator,'' the IT manager laments. "If we have to switch, it's going to be painful and expensive.'' "But if it comes out that in order to use some SAP intranet applications we have to be on Internet Explorer, we'll have to slog through the pain."

But a short-term savings may lead to a more expensive commitment, cautions John Minteer, system integration manager at Cubic Corp., in San Diego.

Cubic recently opened its door to Microsoft to get its free browser, after NetManage, Inc. substituted Internet Explorer for its own browser in the Chameleon desktop communications suite Cubic uses. Now that Cubic uses one Microsoft client, Minteer foresees other Office software gaining a toehold. For example, Microsoft offers its Outlook scheduling program free, bundled with other programs. However, to make Outlook feasible, users need Exchange.

Creative weaponry

Netscape does not lack weapons. Inertia may be underrated, but it is powerful. Netscape gained many enterprise customers by being first on the scene with its browser. Many who stick with Navigator believe the battling browsers are roughly at technological parity. But their users know Navigator, which is entrenched on many desktops, so the IT staff is reluctant to upgrade Navigator any sooner than necessary, much less switch browsers.

Netscape's other primary strength comes from its roots in the Internet, suggests Ron Herardian, CEO and chief technical consultant of Global System Services Corp., a consulting and programming group in Somerville, Mass. "Customers understand that the way to build solutions for the enterprise is with open standards, and only Netscape offers that,'' he says.

Microsoft is notorious for implementing standard technology in proprietary ways, deviating just enough to complicate IT managers' lives with compatibility issues. A recent example is Microsoft's version of Java, which creator Sun says strays too much from the standard.

Microsoft calls its tactic "embrace and extend,'' but even its allies regard the description wryly. Netscape helped develop Java and also supports Lightweight Directory Access Protocol, which it helped develop, and Common Object Request Broker Architecture.

Another Netscape strength is that its products support a range of platforms. It ships servers for Windows NT and Unix, while Microsoft, as the operating system vendor, provides its Web server line only on Windows NT.

Microsoft's trademark deviousness is also part of another Netscape edge that IT managers mention: the gut factor. Sometimes Netscape gets points simply because it's not Microsoft.

"We seem to consistently embrace Netscape over Microsoft, though I'm not entirely sure the grounds aren't mostly emotional,'' says Dan Goussy, IT director at Volkswagen of America, Inc., in Auburn Hills, Mich.

Anti-Microsoft attitude works to Netscape's favor in partnerships too. Some ISVs would rather work with Netscape even though Microsoft is more experienced and better at providing service.

But Netscape matches Microsoft's reputation in one way; many ISVs won't speak publicly. They can't afford to have Netscape angry at them for public criticism, just as for years they've been afraid to reproach Microsoft.

"It has become easier to deal with Netscape,'' one ISV simply notes. Although Netscape said ISVs were a priority years ago, in the past six months its reseller support organization has become more responsive. But with the legions of resellers and integrators pushing Lotus Notes and Domino, not to mention all the BackOffice developers, those efforts may not be enough, Global System Services' Herardian observes. Netscape has to move quickly, he adds.

Herardian doesn't write off Netscape but, like Colgate-Palmolive's Jerome, believes the company must be more aggressive. If only it will. Netscape knows this, at least. "The time for vision is over,'' says Netscape's Paul. "It's the time for building products and taking care of customers.''