Netscape is making a bold gamble to claw back market share from Microsoft.

Browsers drive sales of other products

The California-based software firm has announced that it will give away its browser products for free and publish its programming code on the Internet.

Over the past year, the firm has lost its huge lead over Microsoft in browser market share by continuing to charge for its products while Microsoft gave away its competing Internet Explorer.

Users will be able to get Netscape browser software for free

Under its new marketing plan, Netscape will allow Internet service providers, online services, personal computer makers and other software companies to distribute its Navigator and Communicator products for free.

IBM will begin including both browsers on all its new personal computers, and analysts say other manufacturers are likely to follow suit.

The move will cut Netscape's revenue - at least in the short term. Stand-alone browser sales accounted for 13% of its total revenue in the fourth quarter of 1997.

However, a large browser market share is necessary to drive sales of other products in the face of Microsoft's overwhelming marketing muscle.

Netscape's loss of browser share led to slower sales of its other products in the fourth quarter. Earlier this month, it told Wall Street to expect a loss of $85 million to $89 million - the biggest in its history - blaming weak Asian sales and competition with Microsoft.

Netscape hopes PC makers will install its browsers as primary software

Netscape says it may benefit from Thursday's settlement between the US Justice Department and Microsoft, which will see Microsoft's Internet Explorer icon removed from the Windows 95 operating system desktop.

Netscape says this, along with similar antitrust moves taken by foreign agencies, leaves room for it to get PC makers to install Netscape browsers as the primary Internet software on their machines.

Netscape says that in the education market where its products are free, its client software commands approximately 90% share, which it says shows users tend to choose Netscape when the choice is freely available.

Netscape says its browsers have an installed base of more than 68 million.

Free code

Netscape says it has successfully shifted its revenue focus away from browsers towards enterprise software and its Web site business over the past year.

Netscape code will be available on a special web page

However, analysts say the firm also needs to improve its browser to beat back Microsoft, which has made major technological improvements in the past two years.

To that end Netscape is making its programming code available on the Internet, so that independent programmers can modify and improve its browsers.

It aims to post the source code for the next generation of its Netscape Communicator client software by the end of the first quarter of 1998. It will be available on a special Web site, where users can also post their own enhancements and take part in newsgroup discussions.

It is an aggressive move - software firms normally jealously guard source code. The company hopes to harness the creative power of thousands of programmers on the Internet by incorporating their best enhancements into future versions of Netscape's software.
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