Netscape
Communications
Corporation



501 East Middlefleld Road Mountain View, CA 94043
(650) 254-1900
www.netscape.com

Netscape Communications headquarters, Mountain View, California. Reproduced by permission of AP/Wide World Photos.
Netscape Communications headquarters, Mountain View, California.
Reproduced by permission of AP/Wide World Photos.

According to Netscape's Web site, the California-based company "aims to be the leading provider of open software that links people and information over the Internet and intranets." From its birth in 1994 to its meteoric rise and fall, Netscape was the spark that touched off the global Internet boom, turning the information superhighway into the vast and profitable commercial mecca it is today. Millions of users log on daily to send messages, check stocks, buy merchandise, pay bills, and do any number of transactions—all of which would not have been possible without Netscape, founded by recent college graduate Marc Andreessen and venture capitalist Jim Clark.

In the Beginning

The story of Netscape begins at the University of Illinois at Champaign-Urbana, in the school's National Center for Supercomputing Applications (NCSA). Two young men, Marc Andreessen, who was a student at the time, and Eric Bina, a programmer employed by the university, began working on a program to create an Internet "browser" in 1992. The browser would serve as a way to navigate through the thousands and later millions of World Wide Web sites available to Internet subscribers.

The Web, however, was massive and complicated; users had to have a background in computer science even for the simplest search. As Andreessen later told Rick Tetzeli of Fortune magazine, 'Internet software was ten years behind the hardware. I realized that we could pull the software forward a few years." So he had enlisted Bina's skills as a top programmer to help write a software application to make the Web accessible to everyone.

Andreessen and Bina created their browser in about six weeks, completing it in 1993. Called NCSA Mosaic, the boys demonstrated the program in January, and began offering the browser free to Internet users. A few months later, Andreessen graduated and took off for southern California, where he had been offered a job. He was soon contacted by entrepreneur Jim Clark, who had cofounded Silicon Graphics, Inc. and was looking for a new venture. The millionaire met with the boy wonder, discussed the Internet and Mosaic, and agreed to put up $4 million in financial backing. The two finalized a partnership agreement, and Mosaic Communications Corporation was formed in April 1994.

Netscape at a Glance

  • Employees: 1,500
  • Senior Vice President and General Manager: James Martin
  • Subsidiaries: Netscape Communications (Japan) Ltd.; Netscape Communications Ltd. (UK); Netscape Communications S.A (France); Netscape Communications Gmbh (Germany)
  • Major Competitors: Microsoft Corporation; Excite; Infoseek; Terra Lycos; Yahoo!
  • Notable Products: Netscape Navigator; Netscape Communicator; Netscape Intuit; Netscape AOL instant Messenger; Netscape CommerceXert; Netscape Netcenter; Netscape Publishing System; Netscape Suitespot

The Birth of Netscape

By now Mosaic had truly revolutionized the struggling Internet, but there was a snag. Because it had been developed at the NCSA, which was part of the University of Illinois, the school owned the copyright to the program. Neither NCSA nor the university ever prevented Andreessen from using the program or giving it away, but the school would not allow Andreessen and Clark to use the Mosaic name if they intended to profit from its development. The matter was eventually settled in court, a battle that left the young and idealistic Andreessen especially bitter against his alma mater. In November 1994, Mosaic was renamed Netscape; Clark and Andreessen changed the name of their company to Netscape Communications Corporation, with Clark as chairman and chief executive officer (CEO) and Andreessen as senior vice president of technology.

Timeline

1994:
Mosaic Communications Corporation is founded by Marc Andreessen and James Clark; name changes to Netscape Communications Corporation.
1995:
Netscape goes public; expands to Europe and sales climb to $80 million.
1996:
Company opens offices in Latin America; sales hit $400 million.
1997:
Telecommunications companies adopt Navigator as their Internet portal.
1998:
Netscape embarks on joint ventures with Excite! and Qwest Communications; sales of $448 million.
1999:
AOL buys Netscape for $4.2 billion; Andreessen leaves and starts Loudcloud.
2000:
Company makes alliances with Google and Ask Jeeves.
2001:
AOL buys Time Warner for $163 billion and becomes AOL Time Warner.
2002:
Netscape represents only 10 percent of browser market; company files suit against the Microsoft Corporation.

The impact of Netscape was phenomenal; it became the most downloaded program on the Internet and according to International Data Corporation's figures at the time, was used by more than three-quarters of all World Wide Web surfers. Because the Netscape program was free, the company made its profits from its other applications that were for sale. Impressed by the success of the Netscape browser, businesses flocked to purchase other Netscape programs. Among Netscape's early customers were telecommunications giant MCI, Bank of America, and MasterCard, all of whom used Netscape technology for electronic commerce and to guarantee secure transactions over the Internet.

Soon hundreds of the world's largest businesses had come to trust Netscape and were using Netscape technology. At the same time millions of Americans—who had previously found the Web impossible to navigate or had been too intimidated to even try—began surfing the Internet in record numbers. Andreessen and Clark, meanwhile, were putting together a top-notch executive team. In January of 1995, they hired James Barksdale, formerly of AT&T Wireless, as president and chief executive of the company and its two hundred employees. Andreessen and his development staff, which was composed of several of the original NCSA team members, were tinkering with Netscape to make it better and faster. The new improved version, called Netscape Navigator 1.0, was released in April 1995, and was immediately downloaded by millions of Internet surfers for free.

The Inventor of the Internet

British computer scientist Tim Berners-Lee (1955-) is considered to be the inventor of the Internet. He developed the computer codes that created the World Wide Web in 1990. Unlike others, such as Marc Andreessen, who went on to make millions from the Web, Berners-Lee has not profited from his invention. Instead, he formed a nonprofit organization called the World Wide Web Consortium to maintain the integrity of the Internet. In an October 1995 conference at the Massachusetts Institute of Technology (MIT), Berners-Lee said: "I have (and still have) a dream that the web could be less of a television channel and more of an interactive sea of shared knowledge." In 1999, he was named one of the one hundred greatest minds of the twentieth century by Time magazine.

Navigator Takes to the Net

In March 1995, the company opened its first international office, in Tokyo, and formed a subsidiary, Netscape Communications (Japan) Ltd., to do business with the growing Japanese technology market. In the United States, it partnered with Adobe Systems Technology to develop on-line publishing software. This partnership brought interest from some of the country's leading publishers, who bought stakes in Netscape. Adobe, the Hearst Corporation, the Times-Mirror Group, Knight-Ridder, and TCI Technology Ventures all became part owners of Netscape; their investments helped finance the company's increasingly expanding business. Next came an official alliance with Sun Microsystems, Inc., makers of the Java programming software, to share and develop new technology.

In August 1995, Andreessen and Clark took Netscape public, meaning they sold shares of the company on the stock exchange in order to earn money for expansion. Because the company had such a big impact on computer and Internet industries, Netscape stock was hot and everyone wanted to buy a share. Each share was originally offered at $28. The demand, however, was so great that the price rose to $71 per share. At the end of the day, $1 billion in stock sales had been racked up, which meant the stock held by Clark and Andreessen was suddenly worth millions.

The success of Netscape had turned Clark into a billionaire and Andreessen into a megamillionaire. But with Netscape's prosperity came stiff competition, mainly from the Microsoft Corporation and its own whiz kid founder, Bill Gates (see Microsoft Corporation entry). Microsoft had developed Windows, the most used operating system in the world. An operating system is the program that controls a computer's different functions. The company now had its eye on the browser market.

Netscape developed Navigator 1.2 to compete with Microsoft's Internet Explorer 1.0, which was introduced in the fall of 1995. While Navigator 1.2 worked well with Windows, Microsoft had the advantage. Internet Explorer 1.0 was bundled, or included, with its Windows operating system, which was already programmed into most of the world's computers. This meant that people who purchased a computer with Windows on it would probably just use Internet Explorer and not bother with Netscape Navigator.

It was not Explorer, however, that posed the greatest risk to Netscape; it was the slew of other search engines that had burst on the scene. Yahoo!, Lycos, and Excite were all created by enterprising college students and had found their way onto the Internet. As the competition heated up, Netscape began losing some of its users to the newcomers.

Cyber Millions

In the fall of 1995, Netscape passed two important milestones: it made its first acquisition, Collabra Software Inc., and it opened three European offices, in London, England; Paris, France; and Munich, Germany. In support of its new offices, versions of Netscape's many programs were available in French and German, along with Japanese. By the end of the year the company had signed a profitable deal with International Business Machines (IBM) to combine Netscape programs with IBM's extensive voice, data, and video networks. Netscape finished 1995 with revenues of over $80 million and more than three hundred employees.

In 1996, Netscape continued to enter partnerships, branching out in Latin America with several new distributors in Argentina, Bolivia, Brazil, Chile, Paraguay, and Peru. Its increasingly sophisticated on-line programs also appealed to a who's who of famous companies and organizations, including Apple Computer, Inc., the Walt Disney Company, FedEx Corporation (see entries), J. C. Penney, the New York Times and Los Angeles Times newspaper empires, and Sprint. Everyone, it seemed, wanted Netscape's know-how, including on-line service provider America Online (see AOL Time Warner entry). Oddly enough, Netscape did not make a deal with America Online—which would figure prominently in its future and near demise.

By the end of 1996, the Netscape Web site was being visited more than one-hundred million times per day. The site became a hub that could take surfers to a host of other sites; potential customers could also download trial versions of Netscape's many best-selling programs. Navigator was the browser of choice for fifty-five million personal computer users, and sales climbed to an astonishing $400 million. The following year, Netscape had a work force of over twelve hundred and still led the browser market. Microsoft, however, was gaining ground.

AOL Enters the Picture

By 1998, Internet browsers, also known as portals, were widely available from many sources. In response, Netscape formed an alliance with Excite in the hopes of wrestling many of its surfers back from Yahoo!, which had become the world's number-one search engine, with more than a hundred million visitors each month. While Netscape battled Yahoo, the federal

Netscape was purchased by AOL in March 1999. Reproduced by permission of Field Mark Publications.
Netscape was purchased by AOL in March 1999.
Reproduced by permission of Field Mark Publications.
government had decided to take Microsoft to court for unfair business practices. Many in the computer industry, from software to hardware producers, applauded the action, believing Mircosoft had unfairly attempted to control all aspects of the computer marker. Several software developers, including Andreessen, were called to testify against Microsoft. In the midst of the court battle, American Online (AOL) announced in late 1998 that it was going to buy Netscape.

The acquisition was big news for Netscape, especially since AOL used Microsoft's Internet Explorer as its portal. As the details of the $4.2 billion deal were worked out, the company tried to conduct business as usual. In January, Netscape successfully acquired AtWeb Inc., an on-line services company. Two months later, in mid-March 1999, the sale of Netscape to AOL was completed and Andreessen was tapped to move from Netscape to AOL as its chief technology officer. Andreessen joined AOL, but did not stay long. He moved to a part-time position as "strategic adviser," then left AOL in September 1999 to start a new company, Loudcloud, which was a program developer for Internet sites.

A New Century

As the new millennium approached, Netscape adjusted to life as part of AOL. The company renewed old alliances and made new ones with some of the Internet's leading search engines, including Google and Ask Jeeves. In 2000, Netscape went political with on-line coverage of both the Republican and Democratic presidential conventions, and announced that over one hundred million surfers had downloaded Netscape browsers over the past two years.

By 2002, Netscape was eighteen years old and its legendary browser was in its seventh version. The company was also part of the massive AOL Time Warner empire, which had sales nearing $40 billion annually. Netscape was not, however, the creature it once was; its share of the browser market had slipped to only 10 percent and competitors had caught up to the company in all phases of its technology. Marc Andreessen believed the answer to Netscape's future was squarely in AOL's hands. If the on-line services giant bundled Netscape with its other applications, instead of using Microsoft's Internet Explorer, Netscape would be immediately available to all of AOL's millions of subscribers. AOL considered the option, but nothing was finalized.

The future of Netscape was wide open. Perhaps as a last ditch effort, Netscape filed suit against Microsoft for unfair business practices, the very same issues pursued by the government since the mid-1990s. While many debated the merit of the suit, others believed it was too little too late for Netscape. With the backing of AOL Time Warner, however, there was still a chance Netscape could rebuild—it was after all, the company responsible for unlocking the Internet for millions of global users. For this accomplishment alone, it will be remembered and has been written into history.



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