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  1. Technology
January 22, 1998


By CBR Staff Writer

Drastic times require drastic measures, and to avoid becoming Microsoft Corp roadkill Netscape Communications Corp has decided to give its Communicator client and Navigator browser software away for free. Netscape has seen sales of its client software fall away dramatically under intense competition from Microsoft’s Internet Explorer, which is bundled with Windows 95, or given away free. Netscape, which is set to announce fourth quarter net loss of around $89m, says revenue from sales of client software now accounts for only 13% of its revenue, down from 45% in 1996. In addition to giving away the standard edition of Communicator 4.0 to end users – it’s available with an integrated browser or with none – Netscape will allow OEMs, ISPs, publishers, telecoms companies and others to modify and redistribute Communicator source code under a copyleft license, beginning with a developer release of Communicator 5.0 due by the end of this quarter. Under the licensing scheme, already used widely on the internet, any enhancements made to the code must be returned free of charge to Netscape, which will be able to them in future versions of the basic product. They’ll also be freely available from a web site Netscape will host. Production versions of 5.0 are due in the second half of the year. The Communicator 4.0 standard edition includes email, messaging, groupware, and conferencing facilities. Users which have already paid for Communicator licenses can effectively trade the cost in against new Netscape products and services, including fully-supported versions of the Standard, Professional and DeLuxe Communicator packages Netscape will continue to sell. The Professional edition, which also includes automatic software distribution, calendaring and 3270 emulation, is now priced at $29. Communicator is also to be bundled with the SuiteSpot server products.

New opportunities

By seeding the market with free software Netscape hopes Communicator and Navigator users will turn to it, rather than to Microsoft, for their internet and web software requirements. It says Microsoft’s settlement with the US Department of Justice – see separate story this section – will provide it with significant new opportunities and claims to have already signed a raft of new OEMs and other partners for the client software, details of which it will announce on a call to discuss its fourth quarter results on January 27th. Netscape claims a 60% share of the web client market. It says Microsoft’s share is in the low 20s. Client software sales represented 18%, or $27m, of the Netscape’s $150m third quarter revenue. They are expected to account for 13% – $17m – of the company’s $130m fourth quarter revenue. Netscape said recently it expects to record a net loss of up to $89m when it reports its fourth quarter figures on January 27th, plus a restructuring which expected result in significant numbers of job losses (CI No 3,319). Netscape declined to say how long it will take to recoup the revenue it loses by giving away the software or when it will next record a profitable quarter.

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