Netscape may offer free browser

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In what would be a major marketing shift, Netscape Communications Corp. may follow the lead of Microsoft Corp. and offer a free version of its World Wide Web browser.

Netscape always has officially charged for the Netscape Navigator. But Microsoft changed the game by making the rival Internet Explorer free when it entered the market in late 1995 and began a corporate resolve to focus on the Internet.

So now, Netscape is considering formally offering its own free browser, a move that could help it reclaim falling market share.

"It's certainly something that's under consideration. That's not out of the realm of possibility," said Edith Gong, a Netscape product manager.

Added Group Product Manager Daniel Klaussen: "Changing the revenue model is a very interesting possibility. Whether that [price] approaches zero or not is why we all went to business school."

IE has come on strong through aggressive promotion and bundling deals with Web providers--not to mention that it's built into Windows 95. IE's market share has grown to 28% in January from just 3% in February '96, according to a Zona Research business survey. Netscape has most of the rest. But Microsoft's growth calls into question whether Netscape will continue to lead.

Netscape now officially charges $49 for Navigator. Corporate customers, Netscape's main focus, generally pay up.

Navigator's shrink-wrapped package also is a top seller at computer stores. But many PC users get Navigator free--sometimes illegally, through copies of the program, but often legally. Many Web services buy Navigator and offer it free. Netscape also gives free copies to some software companies to bundle with their packages.

PC users almost always can find a free beta version of a Netscape browser on the Web.

Netscape is proceeding with the second-quarter launch of Netscape Communicator, successor to the current Navigator. Communicator, incorporating a new version of Navigator and other features, will sell for $59 or $79, depending on version. Since many companies buy Netscape software on a subscription basis, they likely will move to the new product.

But Netscape now is considering formally offering a free browser, presumably without much service and support, as an alternative to Communicator. Mr. Klaussen said a free version likely would carry the Navigator badge.

Ms. Gong said Netscape expects Communicator to boost its share of the browser market "a few points." A free version of a basic Navigator would help more.

Netscape risks losing revenue by offering a free browser.

But a free browser also could benefit Netscape: Reviving market share could dispel perceptions that Netscape is losing out to Microsoft; a growing base of Netscape users could help drive sales of lucrative Netscape server software; and growing traffic to Netscape's site could lead to higher ad revenues. Netscape's site already is the No. 1 ad site on the Web.

"The ramifications of [a free browser] are great," Ms. Gong said. "We have to take a careful look at it because of our business model."

Copyright March 1997, Crain Communications Inc.

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