Next portal of call for Netscape
Company pins hopes on revenues from Web site gateway
ANALYSTS the world over crowded into the Golden Gate Club in San Francisco this month for Netscape?s ?strategy day?, proving that chief executive Jim Barksdale and co-founder Marc Andreessen still have star appeal, writes Dominique Deckmyn. It took the duo and their lieutenants a whole day to explain Netscape?s strategy ? even though it is based around just a handful of products. One key marketing target is the enterprise service provider, which Barksdale defines as ?a business that provides large-scale Internet applications to customers, partners and suppliers?. Netscape now sees enterprise service providers and large companies that will develop their own ecommerce networks as its target customers. This is an important change of focus. ?In the past, our sales people went out and targeted anything that moved. Now we?re more tightly focussed on 2,500 named accounts, said Andreessen. Netscape resellers will be left to mop up any business from companies with a turnover of less than $750 million (#449 million). The other key concept in Netscape?s strategy is the Internet portal ? a hub or gateway site ? a place where Internet users start their search for information. Netscape believes that by the millennium, half its revenue could come from its portal. The key goal for a Web portal is to attract as many users as possible and then keep them on the site as long as possible, exposing them to targeted advertisements. Portals do this by offering a great deal of information on one site. Netscape has only just started to refer to its Netcenter site as a portal ? it used to prefer the term hub. Now it says it wants to be the leading Internet portal by 2000. Until now, Netcenter has been a rather unremarkable Web site ? except for the huge number of visitors. One reason is the default settings for every Netscape browser drive it directly to Netscape?s home page on startup. But according to Netscape, that accounts for only about 50% of the ?eight million people a day who start their Net journey with us?. Surprisingly, it was not until 1997 that Netscape became aware of the amazing marketing potential this represented, and only since the beginning of 1998 has it been positioning Netcenter as a core part of its strategy. Since then, Netscape has partnered with search engine provider Excite, CNet and many other search and content providers to construct a faithful clone of Yahoo?s market-leading portal. Netscape general manager Mike Homer lit up when he told the briefing that a deal with Excite had generated ?$21 million of advertising in the last three weeks?. But more importantly, Netscape seems to have figured out how this portal idea fits in with the other half of its business ? the enterprise service providers. The company is betting that portal sites will become as important for the corporate market as they have for consumers. It believes they will become the focal point for ecommerce ? where businesses meet and trade. This year, the company promises to launch the first of many trading networks to link businesses through extranets, which will embrace existing electronic data interchange systems. It also hopes companies will be willing to pay to have their corporate Web sites hosted on Netcenter rather than on some other Web server. Linda Lawrence, vice president of Netscape international marketing, said: ?Many of our partners are already getting 75% of their traffic from their link on Netcenter.? Unsurprisingly, Netscape?s bete-noire Microsoft is also building ?the world?s biggest Internet portal? at its MSN home page. Lawrence could not deny the gravity of this. ?Unlike them, we?ll offer a hosting and commerce infrastructure with no threat of being bought by Microsoft,? she said. Another possible downside is that Netscape, the portal-and-hosting company, will compete with customers of Netscape, the Internet software company. Andreessen said that Netscape will actually not be doing much Web hosting itself. Rather, it will find third parties to offer hosting services on Netcenter ? that tends to weaken his earlier point that having a portal will be a crucial competitive advantage. If the synergistic link between enterprise service providers and portals remains to be proven, another link appears more promising. Netscape is trying to tie its browser into its Netcenter site, leveraging the browser?s 56% market share to attract users to the site by assuring them it will make the best of new browser features. That is a marked departure from Netscape?s previous stance on universal Web standards ? although Homer points out that Netscape is publishing the source code of its browser, so any other portal company can go out and develop a customised browser for its own site. Netscape has turned an important corner. It is more focused than ever, and it has scaled back its ambitions. But its new strategy is risky. Perhaps Internet portals will go the way of Internet push companies ? nowhere. Even if portals become as important in the business market as Netscape hopes, it remains to be seen if the link between Netscape?s software offering and its Web site pays off, or if Netcenter turns out to be a distraction from the company?s core activity. ?US NEWSWIRE with additional reporting by Tim Stammers.