Competing against Microsoft: Sun and Netscape

By Richard Morochove

First published October 16, 1997

Can Microsoft be stopped? Should it be stopped?

I'm a firm believer in competition in the software business leading to better products for computer users. It's competition that has cut the average price of a software application from $600 dollars four years ago to less than $200 today, while delivering programs with more features than before.

Any software company marketing a new product has to consider the actions of the King Kong of software. The informal group of companies arrayed against Microsoft has been called the SINO Alliance, an acronym based on the initials of its four members: Sun Microsystems, IBM, Netscape Communications, and Oracle.

There's a right way and a wrong way to fight Microsoft. These are neatly illustrated by actions of two members of the loose alliance, Sun and Netscape, in response to Microsoft's Web browser, Internet Explorer 4.0.

Last week Sun filed a lawsuit against Microsoft, alleging it wasn't living up to its agreement regarding support of Sun's Java language in Internet Explorer 4.0. Essentially, Sun charged that the software giant has failed to support certain functions that would allow Java to run without MS Windows. Microsoft denies the charges. It's virtually impossible for an outsider to determine who's right at this time, since the charges refer to provisions in a contract that isn't public.

Let's assume this isn't a frivolous case and Sun has good reason for its legal action. Sun has taken the right first step to thwart Microsoft from splintering support of the Java language so that it is no longer a write once, run everywhere language that can operate on a host of different computer systems.

If Sun asks for an injunction prohibiting Microsoft from distributing its "decaffeinated" Java in Internet Explorer 4.0, it could deal a critical blow to Microsoft's push to dominate the Web browser market.

Then there's Netscape Communications, which still has roughly 70 per cent of the browser market share with its Navigator and Communicator products, but is slipping in the face of Microsoft's Internet Explorer.

Netscape's brilliant marketing gambit of distributing early versions of its Navigator browser free over the Internet led to its market dominance. But now Netscape charges for its browser, unless you're an educational or non-profit user.

Netscape greatly increased the scope of functions performed by recently-released Communicator, its successor to Navigator. This mistake led to conflicts with former staunch supporters, such as IBM. Big Blue believes Communicator conflicts with some of the functions performed by IBM's Lotus Notes and now prefers to bundle Microsoft's browser with its new PCs.

While I have a great deal of respect for Netscape's technical prowess, the company's marketing is decidedly amateurish. The company's one consistent message is "We deserve your support since we're not Microsoft."

Aside from the very top executives, such as Marc Andreessen and James Barksdale, Netscape employees don't seem to have a grasp of the company's direction. I toured the company's California headquarters a few months back as part of a small group and attended a presentation by a vice-president. When I asked him about Netscape's position on Internet push technology, he drew a blank and promised to have someone get back to me.

I can't imagine anyone in the equivalent position at Microsoft who would be so clueless about an important element of company strategy. I also gave my card to a public relations representative and asked to be placed on the company's news release list.

I haven't heard back from either people. Nor have I ever heard from Netscape Canada. That's not good enough, particularly when the company is competing against the slick marketing machine of Microsoft.

Make no mistake about it, Microsoft is one money-spinning juggernaut. According to a recent survey of the richest Americans in Forbes Magazine, Bill Gates once again topped the list as his net worth doubled to $40 billion (U.S.) in the past year, based largely on his holdings of Microsoft. It's hard to understand what such a large number means, so let's break it down into something more comprehensible.

Let's assume Gates works a punishing 90-hour week with just two weeks off for vacation. Let's also say his wealth continues to increase at the same pace and his gains are spread evenly throughout the year. If you took three minutes to read this column, Gates' net worth increased about $300,000 since you read the headline. CW