Originally created 10/10/96

Netscape head seems to concede some turf to Microsoft

LAKE BUENA VISTA, Fla. (AP) - The head of Netscape Communications, the leading maker of software for browsing the World Wide Web, insisted that his company still had a "fighting chance" despite aggressive incursions by archrival Microsoft Corp. onto Netscape's turf.

Netscape chief executive James Barksdale on Tuesday said his company was intensifying its efforts in the market for Internet-related software for businesses.

Barksdale's comments sharply contrasted with the euphoria by investors barely a year ago - over a company that came from nowhere to dominate the market for software that allows people to cruise the World Wide Web.

Facing off against Microsoft's Bill Gates - before a computer symposium that featured thousands of technology managers and other potential buyers of Internet software - Barksdale played down the "browser wars as the current bloodsport in the popular press."

Back in August 1995, investors snapped up Netscape stock in an initial public offering that gave the startup company a valuation of $2.2 billion in its first day of trading. Its annual revenue at the time was just a few million dollars.

Though Netscape still controls about 80 percent of the Internet "browser" market with its Navigator software, the company has been thrown into defensive mode by a recent push by the far bigger Microsoft.

"You keep your wits about you when everyone is telling you you're going out of business in a year ... I would just say we have a fighting chance," Barksdale said in response to a question about the challenge from Microsoft.

Microsoft's Windows operating system is the heart of most personal computers but the company is not yet on top of the latest trend to hit computing. So last summer it introduced its own browser, Internet Explorer 3.0, in a giant giveaway intended to extend Microsoft's dominance to the Internet.

Netscape is fighting back with a new-product blitz that focuses on the corporate "Intranet," or computer networks within companies that allow employees to send E-mail, sift through data bases, run programs and other functions just like users of the Internet.

"The last chapter has yet to be written," Barksdale told the estimated 5,000 people attending the symposium, sponsored by the Gartner Group research and consulting firm.

Barksdale said there will continue to be demand for Netscape because companies demand software that runs on a variety of different operating systems - not just Microsoft products. With that in mind, Netscape had put 40 new products into production this summer.

"Most corporate business people aren't going to change operating systems... " Barksdale said. "That's why it's not a winner-take-all game." He said the company would be a "major player" in the corporate market.

He said Netscape was in a three-way race with IBM/Lotus and Microsoft for the corporate business.

Analysts say that while Netscape has had to downsize its expectations, it probably will be able to expand its niche in the corporate Internet market, where it already gets most of its revenue.

But Gates, who accelerated his focus on the Internet after Netscape took the computer world by storm last year, threatens to dominate browsers and has shaken expectations for Netscape.

Gates said Microsoft was spending about $2 billion a year on general research and development as it lays stakes in what he called a "gold rush atmosphere" of the Internet.

This summer Netscape complained to the government that Microsoft was offering incentives to PC makers to not pre-install Netscape's Web browser software on their machines.

Microsoft denied the charges and claimed Netscape was trying to deflect attention from the new Microsoft browser which it says is technically as good as Netscape's.

The Justice Department has requested information about Microsoft's Internet products and strategies.

"We think we have a good case," Barksdale said in an interview after Tuesday's panel discussion, saying he was confident that Netscape would prevail in the Justice Department investigation.

But Gates' drive reaches back even further.

Microsoft approached Netscape managers two years ago to discuss buying the then-private company, Barksdale said in an interview. Barksdale, who joined Netscape after that proposal was rejected, said Microsoft later offered to buy the electronic code behind Navigator, but "we didn't want to sell the seed corn."


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