Netscape Communications

Abstract

Netscape’s significance to the computer industry is that it developed the Netscape Navigator web browser which dominated the web browser market in the mid-1990s. The decline in the usage of Netscape from over a 90 % market share in the mid-1990s to less than 1 % of the market share in 2006 was due to the browser wars with Microsoft’s Internet Explorer.

Netscape also developed important Internet technologies such as secure sockets layer technology (SSL) used for secure payments and the JavaScript scripting language for web pages.

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Marc Andreessen and Jim (James) Clark founded Mosaic Communications (later called Netscape Communications) in April 1994. James Barksdale was the president and CEO of the company from 1995 until the company merged with AOL in 1998. Netscape’s headquarters was at Mountain View in California.

Netscape’s significance to the computer industry is that it developed the Netscape Navigator web browser, which dominated the web browser market in the mid-1990s. The decline in the usage of Netscape from over a 90 % market share in the mid-1990s to less than 1 % of the market share in 2006 was due to the browser wars with Microsoft’s Internet Explorer. The browser wars are discussed later in the chapter.

Netscape also developed important Internet technologies such as secure sockets layer technology (SSL) used for secure payments and the Javascript scripting language for web pages. SSL is a protocol for transferring private information over the Internet, and it creates a secure connection between a client and a server. It uses public and private keys to encrypt and decrypt messages, and SSL is supported by both Netscape Navigator and Internet Explorer.

Andreessen (Fig. 24.1) was a graduate of the University of Illinois and had spent time at the university working at the National Centre for Supercomputing Applications (NCSA). He worked on the Mosaic browser at the NCSA, and he recognised its commercial potential.

Fig. 24.1

Marc Andreessen at the Tech Crunch40 conference in 2007

Clark (Fig. 24.2) was the founder of Silicon Graphics, Inc. (SGI), a company that specialised in high-performance computing. Many of the new employees of Mosaic Communications were previously employed by NCSA or SGI. There were legal issues with the name “Mosaic” in light of the existing NCSA Mosaic browser, and the company was renamed to Netscape Communications in late 1994.

Fig. 24.2

Jim Clark

Netscape Navigator 1.0 was launched in December 1994, and at that time there was no real competition in the browser market. Microsoft was slow to recognise the importance and commercial potential of the web, and it was slow in developing its own web browser. Netscape Navigator was the most advanced browser available, and so it became an immediate success. By early 1995, the Netscape browser was the dominant player in the browser market, and it was the standard portal for entry to the web.

Netscape 2.0 was released in 1995, and it transformed Netscape Navigator from a web browser into an Internet suite. It included new features such as an email reader called Netscape Mail which allowed HTML email to be displayed. Netscape renamed its Internet suite to Netscape Communicator in a later release, and this consisted of Netscape Mail, newsgroups, an address book and Netscape Composer.

Netscape went public in 1995, and its successful initial public offering valued the company at over $3 billion. By the late 1990s, the Netscape browser was available on a wide range of operating systems, including Windows, Mac OS and Linux. It had a similar appearance and it worked almost identically on each of these platforms, and it provided a standard point of entry to the web.

Microsoft recognised the threat that Netscape posed to its business, and it set out to create its own browser. It licenced the Mosaic browser source code, and it created its first version of Internet Explorer 1.0. This browser was released as an add-on pack to Windows 95. Netscape and Microsoft enhanced their browsers throughout 1995 and 1996, and by the time Internet Explorer 3.0 was released in 1996, both browsers had similar capability.

Microsoft began to bundle Internet Explorer with its Windows operating system from 1997, and Internet Explorer rapidly became the most widely used browser. Netscape took a legal case against Microsoft alleging that it was engaging in anticompetitive practices by giving away Internet Explorer with its operating system. The Department of Justice in the United States later filed a lawsuit against Microsoft alleging that Microsoft gave Internet Explorer away free of charge to prevent Netscape becoming a platform that would compete with Microsoft.

Netscape created the Mozilla project in 1998 with the objective of making the source code of the Netscape Communicator product freely available. The Mozilla Organization was founded to coordinate the future development of the browser product. Mozilla was the original name of the Netscape Navigator, and the Mozilla project initially aimed to create a community that would provide open source software for technology companies. The idea was that the open source software created would then be commercialised by companies such as Netscape. The Mozilla Foundation was set up in 2004, and it is responsible for the development of the Firefox browser.

AOL took over Netscape in 1998 for $4.2 billion, but its acquisition did not lead to any major developments of the Netscape browser. This proved to be a major error, as Netscape began to fall behind Internet Explorer, and this led to further falls in its market share. Netscape 6 was developed on the Mozilla open source code, and it was released in 2000. Netscape 7 was released in 2002.

AOL shut its Netscape department in 2003, and it continued development in-house using Mozilla’s Firefox as its code base. The final released version of Netscape was Netscape 9, and AOL ceased development of Netscape Navigator in February 2008. Today, the Netscape browser is no longer supported, but the Mozilla Organization continues to develop the Firefox browser. Today, the browser market is shared between Firefox, Internet Explorer and Google Chrome, with Internet Explorer having close to a 60 % market share. Google Chrome is gaining rapid market share in the tablet and mobile devices market.

24.1 The Browser Wars

Microsoft was initially slow to respond to the rise of the Internet, but it soon recognised the threat that Netscape posed, and it began work on its own web browser. It created its first version of Internet Explorer in 1995. Windows 95 was released later that year, and there was a separate add-on pack to Windows 95 that included Internet Explorer and TCP/IP. It released Internet Explorer 4.0 in 1997, and IE 4.0 was released as part of Window’s operating system.

This was the beginning of Microsoft’s dominance of the browser market. Netscape had dominated the market up to then but as Internet Explorer 4.0 (and its successors) was provided as a standard part of the Windows operating system (and also on Apple computers), this inevitably led to the replacement of Netscape by Internet Explorer.

Netscape launched a legal case against Microsoft alleging that Microsoft was engaged in anticompetitive practices by including the Internet Explorer browser in the Windows operating system and that Microsoft had violated an agreement signed in 1995.

The Federal Trade Commission and Department of Justice in the United States investigated Microsoft on various antitrust allegations in the early 1990s. The 1991–1994 investigations by the Federal Trade Commission ended with no lawsuits. The 1994 investigation by the Department of Justice ended in 1995 with a consent decree. The 1995 decree imposed restrictions on Microsoft and prohibited bundling of certain products. The Department of Justice alleged in 1997 that Microsoft violated the 1995 agreement by bundling Internet Explorer with its Windows operating system and requiring manufacturers to distribute Internet Explorer with Windows 95.

The Court of Appeals rejected this violation of the consent decree in 1998 and stated that the 1995 consent decree did not apply to Windows 98 which was shipped with an integrated Internet Explorer as part of the operating system. The Department of Justice then filed a major antitrust suit against Microsoft in 1998 and argued that Microsoft’s bundling of Internet Explorer and its attempts to eliminate Netscape as a competitor in the browser market was much more than adding new functionality to its operating system.

It alleged that Microsoft added browser functionality to Windows and marginalised Netscape because Netscape posed a potential threat to the Windows operating system. It alleged that Microsoft feared that since Netscape could run on several operating systems, this could erode the power of Windows as applications could be written on top of Netscape.

In other words, the Department of Justice alleged that Microsoft gave away Internet Explorer and bundled it with its operating system to prevent Netscape becoming a platform that would complete with Microsoft. That is, Microsoft’s actions were a defensive move to protect its Windows monopoly. The legal action concluded in mid-2000, and the judgement called the company an abusive monopoly.

The judgement stated that the company should be split into two parts. However, this ruling was subsequently overturned on appeal.