> "This is intended for a new computing universe which will
> total 500 million devices over the next five years," said
> Marc L. Andreessen, senior vice president for technology
> of Netscape
In a related leap forward:
> the Netscape shell technology would be based on a channel
> metaphor, a concept similar to one that Microsoft is
> working on to include in its next version of its Internet
> Explorer browser.
> The channel metaphor, which Microsoft is also working
> with, would be designed to make computer users feel more
> like they were using a television set, rather than reading
> an electronic book.
August 26, 1996
Netscape-Led Venture Pushes Up the Pressure on Microsoft
By JOHN MARKOFF
)AN FRANCISCO -- Opening a new front in its increasingly bitter war with
_Microsoft_, _Netscape Communications Corp._ plans on Monday to announce that
it has created a software company that will enter an alliance with _IBM_,
_Oracle_ and four Japanese consumer electronics giants, Netscape executives
said in interviews over the weekend.
The Netscape-led venture, called Navio Corp., intends to develop refined
software for browsing the Internet and a new software operating system that,
the executives hope, will become a standard means for controlling Internet
access and basic operations for a broad range of consumer devices.
The devices might include new generations of video game systems, television,
cable modems, set-top boxes and cellular telephones along with hand-held
wireless communications units and network computers used for surfing the
The company, founded earlier this year, represents a novel counterpoint to
the strategy that gave Microsoft its dominance in software for personal
In the vision of Netscape executives, consumers will eventually be able to
choose between multiple-purpose personal computers, which cost more than
$1,000 and as much as $5,000, and an array of consumer devices for specific
tasks, which could cost less than $100 and perhaps no more than $1,000.
While Netscape officials concede that most personal computers will continue
to run on Microsoft's software, they hope that most of the cheaper consumer
devices would run on software designed by Navio.
"This is intended for a new computing universe which will total 500 million
devices over the next five years," said Marc L. Andreessen, senior vice
president for technology of Netscape, a company based in Mountain View,
Calif., that has gone from infancy to a market value of $3.18 billion in less
than two years -- all on the strength of its Internet browser software.
The four Japanese companies in the alliance -- _Sony_, _Nintendo_, _Sega
Enterprises_ and _NEC_ -- are dominant in producing a variety of home
entertainment devices, and the expected announcement, analysts said, suggested
that the Internet, which until now has largely been a business and
educational marketplace, would soon vastly broaden its scope.
"Historically the consumer electronic industry has been dominated by closed
platforms," said Roger Mcnamee of Integral Partners, a technology investment
fund in Menlo Park, Calif. "The fact that these companies are joining with
Netscape in an open standard speaks volumes about the compelling attraction of
Netscape has not yet disclosed the financial terms of the new company or
which of the other businesses involved would invest in the venture and which
would simply establish software-licensing deals or other partnerships. But
Netscape executives said there would be six investors in addition to Netscape
Navio's president and chief executive is Wei Yen, a former executive of
_Silicon Graphics_. Its chairman is James H. Clark, Netscape's co-founder.
Microsoft executives have said in recent months that they consider Netscape a
potential direct competitor in the operating systems business. William H.
Gates, Microsoft's chairman, abruptly announced in December that Microsoft
would change its corporate strategy to benefit from the rapid growth of the
Internet. Since then, the company has exhibited a single-minded determination
to catch up and dominate the Internet software arena.
If Netscape's new software strategy is successful, it could shift the contest
for control of the computer industry away from personal computers to products
where Microsoft has no special advantage.
"Netscape has yet again gone out of the defined boundaries of the world as it
is controlled by Microsoft and found a new way to do things," said James F.
Moore, a computer-industry consultant and president of Geopartners in
Cambridge, Mass. "The question is: Can they do something that consumers want?"
Moore pointed out that in the 1980s, a number of other companies tried
without success to change the rules against Microsoft. For example, _Apple
Computer_ attempted to create a market for personal digital assistants with
the introduction of the Newton, and _General Magic_ tried to build similar
technology with its Magic Cap operating system and Telescript communications
Both of those efforts have been significant disappointments. But both came
before the Internet became the driving market force in the computing industry.
Netscape is betting that the vast flow of commerce, information and
entertainment available through the Internet will create a ready market for
non-personal computer consumer devices.
Wei, Navio's president, predicted that applications that merged technologies
like inexpensive global-positioning satellite receivers with the information
available through the Internet would create a new class of consumer devices.
Such a system in an automobile would simplify the process of locating any
business or restaurant, he said, adding, "The wave of these new consumer
appliances will begin to break next year."
Microsoft has also been looking for ways to scale its Windows software down
to fit comfortably on small consumer devices. Later this year, it plans to
announce a project it has named Pegasus, a device that is reported to be a
portable companion to a personal computer.
However, in recent months, Gates has said that Pegasus will include some
Internet browsing functions as well, which would make it a competitor for the
proposed network computer that is now being developed by such companies as
Oracle, Netscape, _Sun Microsystems_, Apple and International Business
Separately, in a telephone conference call with industry consultants on
Friday, an IBM executive said the company would soon introduce a network
computer costing less than $700 that would have an Internet browser program
and would run programs written in Sun's Java programming language.
IBM, with the $700 network computer, and Oracle both hope to build new
businesses around consumer devices. Oracle, a data base company, wants to
provide the data base software for a future network computer.
Netscape's flanking strategy comes as it has increasingly seemed in danger of
losing ground to Microsoft, which is competing in the Internet market by
giving away the same kind of browser software that Netscape sells.
In recent weeks, each company has tried to trump the other's browser
offerings by adding features and making new alliances. Simultaneously, the two
competitors have engaged in an angry public debate over whether Microsoft is
using illegal, monopolistic tactics in an effort to take market share away
from Netscape in browsers and Internet servers.
It is unlikely that the acrimonious charges and countercharges will end
anytime soon. In an interview on Friday, Andreessen said that Netscape's next
version of its Navigator software, named Galileo, was nearing completion and
that the company was also working on another program that would act as a
replacement for the basic screen, or user interface, presented by Windows 95.
He said that the Netscape shell technology would be based on a channel
metaphor, a concept similar to one that Microsoft is working on to include in
its next version of its Internet Explorer browser.
The channel metaphor, which Microsoft is also working with, would be designed
to make computer users feel more like they were using a television set,
rather than reading an electronic book.