OPINION: Where did Netscape go wrong?

By Published on .

Netscape Communications Corp., the company that defined the concept of "Internet strategy," now seems desperately in need of a focused image.

You think you know what the Netscape brand stands for? Well, to a large extent your answer is going to depend on what business you're in. To most consumers and casual Net surfers, Netscape is in the browser business and, indeed, the company reports it grossed $12 million selling browsers and related retail software in the fourth quarter last year.

Yet that is the least of Netscape's business. If you're in the Web advertising game, then you know that Netscape is actually one of the largest ad-supported publishers on the Web. It made considerably more money on its media business in the fourth quarter than it did moving browsers -- $21 million, according to the company's own analysis.

Neither of these are Netscape's biggest moneymaker, of course. If you're a corporate IS executive or happen to be a financial analyst, you know Netscape considers its core business to be selling enterprise server and e-commerce software. That accounted for roughly $95 million of the total $125 million of revenue it reported in the fourth quarter results.

Talk about a muddled situation: Here's a company universally known for a giveaway browser that's rapidly and publicly losing market share; that is one of the most successful Web publishers but scarcely acknowledges it; and that insists it's a major player in the enterprise server business, but puts very little advertising or marketing muscle behind that business other than its purely Internet-driven marketing efforts.

It's hard to know just what Netscape really wants to be amid this snarl of contradictions. This is a company that just marked its one-year anniversary of having no ad agency at all. And because it does no real brand advertising (Microsoft spends more on print ads for a computer mouse than Netscape spends on its whole product line in print or on TV), the clearest image of the company comes not from its own marketing, but from independent press coverage.

Unfortunately for the company, this means Netscape's current market position is best summarized as simply: "We're not Microsoft." That's not a good position for the long term; just ask Apple Computer. Rallying the troops against Bill Gates may work for a little while, but eventually you're going to have to come up with a real strategy.

In retrospect, it's easy to see how Netscape slipped off target. In its early days, it received nothing but adulatory press, so the company never saw the need to spend its hard-earned money to build the brand. But those who live by the sword are hacked by it as well, and now, in the vacuum left by Netscape's own marketing absence, the news coverage has become murky and confused. Or worse: The most famous of the original Internet success stories now lets itself be defined by the press as an antitrust victim needing government protection, a fallen giant, a failing takeover target.

That's a terrible market position. If the company is serious that its real business is enterprise server sales, then it's going to have to step up to the plate with the other big boys. It must move beyond the Internet and develop a substantial marketing campaign in print and perhaps even TV. It must offer its customers a crystal clear market proposition and brand image.

What is Netscape? Right now, I'm afraid it's anybody's guess.

David Klein is associate publisher-editor of the Ad Age Group. He can be reached at [email protected]. This story originally appeared in NetMarketing, a feature of Advertising Age's Business Marketing

Copyright March 1998, Crain Communications Inc.

Most Popular
In this article: