Founders: James H. Clark and Marc Andreessen.
Distinction: Rewrote rules for Net navigation and initial public
Primary Products: Internet browser, Web portal, online
Annual Sales: $447.8 million.
Number of Employees: 2,936.
Major Competitors: Lycos, Microsoft, Yahoo!
Senior Vice President & General Manager, Netscape Netcenter:
Jim Martin; Senior Vice President, Netscape Enterprise Group:
Headquarters: Mountain View, Calif.
Year founded: 1994.
Website : www.netscape.com
In the beginning, a trip into cyberspace was no piece of cake. Your
modern crawled along. You needed expertise in mysterious electronic
procedures, such as FTP and TelNet. Your connections failed constantly,
and when they didn't, your computer crashed. The early Net was
undeniably great, but it also was not ready for prime time. It didn't get
there until 1994, when Tim Berners-Lee and researchers at the University
of Illinois unveiled a new way to convey data online. They developed a
new software program dubbed "Mosaic" that helped everyone access it.
The pioneering combination already paved the way for everything—
from America Online to online banking. It also led directly to Netscape
Navigator, a commercial version of Mosaic from its original developers. A
Fortune computer executive immediately took the burgeoning cybercommunity
by storm—because his product worked as advertised, could be
downloaded for free from the Web, and was the only player in a game that
suddenly had everyone's attention.
More than 6 million copies of Netscape's new application were put
into use within six months of its availability. And the company—much like
the Web—took off. Less than 10 months later, it executed one of the most
extraordinary initial public offerings in Wall Street history. Five million
shares of its stock went on sale at $28, double the initial estimate. And in
one day the stock soared as high as $78 before closing at $58. The
company turned its first quarterly profit four months later, the share price
reached $170, and market capitalization hit an astonishing $5 billion.
Netscape responded by enhancing the online site that its browser pointed
new users to automatically, quickly making it one of the Web's most
visited. It also kept producing updates of the browser itself and related
products aimed at businesses and Internet developers.
By its second birthday, some 38 million individuals were using
Navigator and the business world's top companies were commercial
clients. This naturally caught the attention of Bill Gates and his crew at
Microsoft, which answered with a similar application of their own. The rest,
as they will be saying for years, is history.
Netscape was founded in April 1994, a few months after Dr. James
H. Clark was unceremoniously forced out of the computer systems
company that he started 12 years earlier. Angry with his treatment at the
Mountain View, Calif.-based Silicon Graphics, and in search of new
challenges, Clark hooked up with 23-year-old Marc Andreessen from the
University of Illinois on the recommendation of a friend. Andreessen was a
creator of Mosaic, the new Web-accessing software developed at the
university's National Center for Supercomputing Applications. He had left
the Urbana-Champaign campus for Silicon Valley after calls to
commercialize the graphical interface browser fell on deaf ears. Like Clark,
he now felt he had something to prove.
The two hit it off immediately. Their first idea, a venture to put
Nintendo games online, didn't pan out. Andreessen then suggested that
they develop an application to compete with Mosaic, an idea he had
previously rejected out of hand. Clark, impressed with the early Web's
possibilities, enthusiastically agreed. They recruited much of Andreessen's
programming team from the original project, and a round-the-clock effort
kicked off in new offices not far from Clark's old Mountain View stomping
grounds. By October they posted an experimental version of their
"Netscape Network Navigator" on the Web, and online denizens began
eagerly downloading the exciting new software "available for all popular
Much like a lot of software developed during the early days of the
Internet, Netscape's products were based on so-called "open standards"
that worked with virtually any operating system. Coupled with a price that
started at $39 9but was quickly dropped to nothing), it proved a perfect
fit. Navigator was a bona fide hit before the company's first anniversary.
And it brought in James L. Barksdale—former chief executive at AT&T
Wireless Services—to guide it to the next level as president and CEO. The
future looked so bright, in fact, the company also decided to go public
even though it was just 16 months old and had never shown a profit. The
resultant initial public offering on August 9, 1995, was one of the most
successful that the stock market had ever hosted. Netscape followed with
its first profit, an updated browser, and a press release announcing that its
products were now used by 15 million people around the world and more
than 70 companies in the Fortune 100.
The roll continued during 1996, when the stock split and AOL began
edging further onto the Web by officially making the Netscape browser
available to its 5 million customers. Quarterly revenues from ads on the
Web site and business-based products increased more and more, and by
June Netscape's 38 million customers led it to proclaim Navigator "the
world's most popular PC application." In the fall, its reached an astounding
$100 million—representing a 329 percent boost over the previous year.
Clearly, the Web was shaping up as a powerful economic and cultural
force, and Netscape was in the forefront in both areas.
As the rapid growth of the Web's raucous period continued through
1997, tales of Netscape's extraordinary success—and those of other online
pioneers like America Online, Yahoo!, and Amazon.com—certainly did not
go unnoticed. Potential competitors who suddenly found themselves on the
sidelines of the biggest gold rush since the actual 1849 Gold Rush
hurriedly developed strategies to catapult them into the game.
Unfortunately for Netscape, Bill Gates and Microsoft zeroed in on the
It was obvious from the start that Microsoft considered its new
Internet Explorer central in its belated attempt to conquer cyberspace. It
took the aggressive approach in ensuing marketplace battles, nonetheless.
Microsoft made many enemies and rapidly brought on the first in a series
of legal challenges that grew more serious over time. Netscape, unwilling
to back down from the threat to a business that it almost singlehandedly
created, tried ramping up for the bruising Browser War. For a time, Clark,
Andreessen, and Barksdale managed to match their rival from Redmond
upgrade for upgrade. Both browsers matured so similarly, in fact,
arguments about their relative merits came to resemble those over Pepsi
But the continuing assault took its toll. By the time 1997 came to a
close, Netscape found itself facing a $115.5 million net loss. It responded
by forming a new division that would focus on making Netcenter the Web's
leading hub site or "portal". It added news headlines, discussion groups,
networking tools, and "a marketplace where users can shop for popular
item such as books, music, travel services, flowers, discount products,
software, and much more," as a press release touted. It all proved too
little too late, though. With Microsoft usurping more and more of the
browser, market, and other sites such as Yahoo.com, Amzon.com and
aol.com also vying to become top portal Netscape was hopelessly
The inevitable arrived in an announcement on November 24, 1998.
AOL—Netscape's erstwhile partner and competitor—had agreed to acquire
the browser firm in a "stock-for-stock, pooling of interests transaction"
that increased in value over time to around $10 billion. Closing was set for
the following spring. America Online took great pains to emphasize that its
employees would be welcomed into the parent company. Yet everyone
who knew Netscape knew that it would never be the same. Netscape's
portal site surpassed 13 million members early in 1999, but for the first
time Internet Explorer passed Navigator in market penetration.
The Web community was generally down on the AOL acquisition, and
things were looking rather bleak for the team from Mountain View. Most
critics thought it only coincidental that the sale was announced and
consummated just as the U.S. Justice Department was filling its industryshaking
browser-based antitrust suit against Microsoft, but they couldn't
decide whether it helped or hurt the government's case.
Some of the pessimism inside and outside of Netscape was alleviated
when Marc Andreessen was named America Online's new Chief Technology
Officer. And observers generally approved when AOL announced a new
organization that integrated both companies, a new alliance with Sun
Microsystems that used Netscape to boost its e-commerce performance,
and a new pledge to keep developing and releasing updated browsers. But
the mood soured when AOL announced that around 1,000 positions would
be eliminated equally from Netscape's forces and its own to reduce what it
called "job redundancies."
New browsers did indeed arrive at first, and they generally continued
matching Microsoft feature-for-feature. Netcenter registration kept
climbing as well, but within two months the Sun alliance was proving
fractious—particularly to those who supported Netscape's commitment to
open standards and multiplatform software. Delays in an additional
browser updates also began taking their toll, and suddenly almost no one
was happy. In September, co-founder Andreessen found the situation no
longer palatable and left to start another firm.
Things seemed to pick up in 2,000 with Netcenter registration
soaring to 25 million, along with the Netscape 6 browser grabbing good
reviews. But Netscape's market share had by then fallen to 30 percent,
and an existing agreement between Microsoft and AOL ironically still made
Internet Explorer its default browser. No matter the eventual outcome,
though, Netscape's pivotal role in Internet history already has been sealed.