Friday, January 23, 1998

Netscape now giving away Internet broswer

By CATALINA ORTIZ / AP Business Writer

SAN JOSE, Calif. (AP) -- Netscape Communications Corp., fighting to regain ground in the browser war against Microsoft, on Thursday took a weapon from its rival's arsenal: Its Navigator software is now free.

Netscape said it will let computer makers and Internet service providers distribute Navigator without restriction. It also is encouraging computer users to download the software from the Internet without charge.

The no-charge policies also apply to Communicator, a suite of business programs that includes the browser.

In addition, Netscape will put key Navigator code on the Internet, allowing software developers to offer improvements, which the company will review for possible use.

"This ... is a major sea change in the way we think about software companies, software distribution and the way software will be used in the future," said Jim Barksdale, Netscape's chief executive officer.

The announcement was widely expected. Netscape, which has lost market share to Microsoft's free Internet Explorer browser, depends increasingly on selling to corporations software that links computers in company-wide networks.

Yet Netscape needs to retain and expand the number of Navigator users because the browser is linked to its business software and services.

Industry analysts said giving away Navigator should help Netscape at least a little.

Manufacturers who now put Microsoft's Explorer on their personal computers are more likely to offer Navigator as well, they said. And businesses and individuals, no longer having to pay for Netscape's program, may now consider using it.

"Although I don't necessarily believe Netscape is going to turn the marketplace around on this issue, they are doing the right thing at the right time," said Stan Dohlberg, director of software strategies for Forrester Research Inc. in Cambridge, Mass.

"It will help them stem the tide of market share erosion," he said.

Netscape, based in Mountain View, Calif., has been embroiled in a struggle with Microsoft Corp., the world's largest software company, over their competing browsers. The programs enable computer users to get information from the Internet.

Microsoft not only gives away its browser, but has bundled it with its Windows 95 operating software, which governs the basic functions of 85 percent of all personal computers.

Netscape has been feeling the pinch of that competition. Netscape cited that pressure last week as one of the reasons for a projected quarterly loss of more than $80 million and plans to lay off 13 percent of its work force.

Netscape announced its no-charge policies, effective immediately, as Microsoft and the U.S. Justice Department partly settled an antitrust suit over Internet Explorer.

The government is seeking to stop Microsoft from requiring computer makers to install Internet Explorer as a condition of getting a Windows 95 license.

Microsoft Corp. on Thursday agreed to offer its Windows 95 operating system to computer makers without requiring easy, point-and-click access to Explorer.

Barksdale, in a conference call with reporters, noted that larger issues -- including whether Microsoft can incorporate the browser into the operating software -- still must be resolved. But he welcomed the partial settlement.

"I think (Microsoft) finally came round to doing what they should have done," Barksdale said. "We feel good about it."

Microsoft, meanwhile, predicted that Netscape's decision to give away Navigator would have little effect.

Dave Fester, group product manager for Internet Explorer, said computer users care more about quality than cost. For evidence he pointed to the slow start of Microsoft's program, which didn't attract many users until it began to be improved.

"Great -- take away the price and let it compete on the strength of the product," he said. "In the end (customers) are going to choose the product which is better."

Fester also pointed out that while Netscape hasn't previously given Navigator away, many Web sites have long offered visitors free downloads.

Internet Explorer's share of the browser market soared in the first nine months of last year to 39.4 percent, up from 20 percent a year earlier, according to Dataquest Inc.

Netscape, meanwhile saw its share slip from 73 to 58 percent during the same period, the research company said. But Netscape said during the conference call that it estimates its market share as being in the low 60-percent range.