Thriving Netscape could set standard for all commercial on-line businesses

April 03, 1995|By San Francisco Chronicle

The success of Netscape Communications has come so fast and has so much momentum that it is difficult to find parallels anywhere. It's safe to say that seldom has a company assumed such a commanding position in so short a time.

In less than a year since its founding, Mountain View, Calif.-based Netscape has ripped through cyberspace, taking the lead in just about every aspect of the Internet. And judging from a spate of announcements last week, Netscape co-founders Jim Clark and Marc Andreessen and Chief Executive Jim Barksdale are developing a grand scheme to set a standard for all commercial on-line businesses.

Netscape began its assault by giving away its World Wide Web browser for free. In the space of six months, the Netscape Navigator has blown away Mosaic to take three-quarters of the market for browsers -- software that lets you point-and-click your way from computer to computer on the Web. An astounding 4 million copies of Netscape have been downloaded off the Net since last fall.

That strategy flew in the face of conventional wisdom, which says give away the razors and sell the blades. By giving away the blades, Netscape found it easy to sell the razors -- expensive software servers used to set up business on the Web. Netscape's servers quickly became the tool of choice for companies including MCI, Pacific Bell, Bank of America, MasterCard -- even Penthouse and Playboy.

Now Netscape is in the process of consolidating its hold by establishing a de facto standard for electronic security transactions. Last month, 19 companies led by Microsoft, IBM and Apple said they plan to use Netscape's Secure Socket Layers technology for Internet security.

"This is the first time we've seen this level of adoption for anything like this. Nothing else has come close," says Mr. Andreessen, the 23-year-old who developed Mosaic at the University of Illinois and founded Netscape with Mr. Clark last April.

Why would all those big names choose Netscape's security scheme? Largely because the security code also is built into the Netscape Navigator. That means there are millions of consumers out there ready to do business right now.

Netscape has widely distributed the SSL security code and is licensing it for other products. "What they're looking for is to capture the standard," says Don Tydeman, publisher of NetGuide magazine. "It's an open standard, but proprietary at the same time. They knew what kind of Trojan horse to build."

To make sure the security remains leading-edge, Netscape has just hired the director of engineering for RSA Data Security, a California firm that supplies underlying security codes for just about every commercial on-line system.

And last week Netscape also unleashed a spate of new products aimed squarely at markets currently dominated by commercial services such as AOL and CompuServe. They include software applications to let large merchants establish Internet malls, a way for small businesses to get on the Internet at minimal cost, and a "Community System" that enables organizations to create such things as on-line chat services and private discussion groups -- the equivalent of the bulletin boards that have made AOL and the others so popular.

The investment community is salivating at the prospect of Netscape going public. "This company can get you excited about the future. Talking to these guys, you realize they're technology visionaries," says Ed Bierdeman, an analyst with Dakin Securities in San Francisco.

An IPO is probably going to happen at some point for Netscape, which has 130 employees and expects to become profitable this year. Mr. Clark is just now finishing up a round of corporate financing, so look for some big companies, probably media or communications giants, to announce investments.

Says Mr. Andreessen, "It's not clear that we really need this, given our current revenue rates, but it will allow us to put additional resources into new areas of development."

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