Netscape: Riding the "Three Waves" of the Net

interviewed by Thomas Caldwell

Thomas Bennett: Our plan for the Asia-Pacific rim is pretty targeted. We have offices right now in Tokyo, Australia, Singapore, and Hong Kong. We're looking at other cities within Asia for the possibility of some other offices in '97.

Some of the Asia-Pacific markets are extremely important to us. Over 80% of our revenue comes from selling to corporations; we sell both client software, which is the browser you see all the time, and server software. We've developed an Internet-based client/server platform for corporations. So the fact that most Asian markets are very IP savvy, and have a high level of computer penetration, make them fantastic markets for us.

Where does Japan fit into the picture?

Bennett: Japan is our second-largest market worldwide, from the revenue standpoint and shipment standpoint. In fact, we opened an office in Tokyo before we opened an office in New York City.

From the start, we realized the importance of being global with our software. Japan is one of our tier-one languages; when we start to localize our products, one of the first we start on is the Japanese version. We are trying to get the delta [the time between the releases] of our English and Japanese versions as close to nothing as possible.

Do you foresee parallel development of multiple-language versions?

Bennett: The key thing there is internationalizing the development of software, so that the core code is not biased towards any one language or culture. Then it merely becomes a matter of localizing that international version.

Could you give some examples of bias towards a single culture? Do you mean something like a software package that only accepts two-digit decimals as currency?

Bennett: Exactly. Or having fields for entering addresses that are structured around a US address format: street address, city, state, ZIP code.

But there are other things. You have to be careful of the way you structure menus, menu commands, and things like that. They don't always translate.

One example is the concept called a "wizard," which is used a lot in installing Windows programs. To some cultures, the term "wizard" may imply certain religious overtones, which could be offensive, or it could mean something different to other cultures besides us [Americans].

Which is the bigger market for you in Japan right now, the corporation or the individual?

Bennett: The corporation, no question. Dentsu is one of our big customers in Japan, and Fujitsu, NTT....

A big concern about the Internet in the Asia-Pacific is the degree of censorship that some governments here are beginning to exert - trying to limit dissemination of political ideas that they disagree with. Do you see this as a problem for Netscape's expansion?

Bennett: It's probably not going to be that big a deal. We're focusing on corporations and enterprise installations of our software, and in general I don't think there is really any kind of censorship that takes place within companies. Individual governments essentially do have the capability to censor, and I think it's unfortunate if there is censorship, but we don't see it as a limiting factor in our growth.

At the end of the millennium, what will the Internet be like?

Bennett: I think the millennium is going to be the realization of what we call the "Three Waves of the Internet." The first wave was when the Internet itself became really big, when end users discovered the power of getting onto the Net and getting information. That was "The Internet."

In 1996, technology was taken behind the firewall of companies, and corporations started realizing the advantage of linking all their people together via the Internet. That's what we call "The Intranet." The next step we see happening is something that has been called "The Extranet." You take these internal networks and expose different parts of them to your customers, vendors, and suppliers. In other words, you develop a completely networked enterprise.

Do you see this going on in Japan yet?

Bennett: It's starting to happen. Some of the Asian markets are more conservative in terms of implementing solutions like that. They'll take time and check out the technology. So it's probably going to happen at a little slower pace in Japan.

Where do you expect Netscape to be in the year 2000?

Bennett: We've been looking a lot at that, believe me. We're focusing our efforts on enterprise solutions. We estimate that corporate-based intranets are going to be a $9 billion to $20 billion industry by the year 2000, and we're aiming for a 30% to 50% share of that market.

Who will be the other 50% to 70%?

Bennett: Probably the players you always see in that kind of a market: Oracle, Lotus, Novell, Microsoft....

Televisions are now being produced with built-in Internet/WWW capabilities. What other applications do you see coming down the line?

Bennett: We spun off a company called Navio, which is intended to provide the same sort of interface to non-computer devices: Web televisions, fax machines, cellular phones, games... things like that. That's definitely a market we've targeted. In fact, we've targeted it so strongly that, in order to keep our focus, we spun off the company as a separate entity.

In the movie Terminator, the story line was that at some future date all of the computers and electronic devices are hooked together and then decide to go after humans. Does that scare you at all?

Bennett: No. Not to get too philosophical, but the Internet is a great example of democracy rather than monopoly. One of the most interesting core notions of the Internet is that we've developed everything based on an open standard that is completely independent; it runs across all different types of platforms and all different types of machines. No one "owns" the Internet; it is basically a public-domain infrastructure.

How much of a threat to Netscape is Microsoft and Internet Explorer?

Bennett: Microsoft is a noble competitor. We've been up against them for two years, and we've managed to maintain most of our market share in our global markets. They've come out with some good products, but that's actually made us a little bit keener and more competitive. They've raised the bar for us.

The key differentiation between what we do and what Microsoft does is that we do Internet only. Everything we do is based on complete platform independence. We're going to run on whatever computer you've got, whether it's a network computer, a diskless network computer, a PC, a Mac, a Unix machine, or any other type of machine that will come out in the future.

Microsoft has multiple agendas; they aren't just making Internet stuff. They do applications software. They do operating systems. They create content. They're in the entertainment business. They have all these agendas that they have to think about when they develop products. They are tied to their operating system; everything they do is intended to get you to buy more copies of Windows NT and Windows 95.

Can you offer any advice for Japanese companies, or foreign companies operating in Japan, on how to profit from using the World Wide Web?

Bennett: Where most companies make money is on their own internal intranets. What they are doing is using the incredible communications powers of the Internet deployed within their company to reduce communications costs, reduce printing and distribution costs, and improve product development, customer support, and customer service.

Simply the notion that anyone with a computer anywhere in the world can get to your company with the click of a mouse, and be able to fill out an order form, get product information - things like that, which used to be very analog communications intensive, or document intensive - are now being done digitally. The greatest "profits" are the savings companies are getting from their own installations.

Isn't installing and implementing an intranet difficult?

Bennett: The great thing is that most people have used a client browser at some point, so the training costs of getting someone up on your internal network is very low.

You'd be surprised at the high percentage of companies that already have an internal web and don't know it! Somebody from the company has downloaded some software, set up an internal web, and told the engineering group about it. They've already got something deployed that the IS people don't even know about.

The key driving factor is that everything in IS departments has to be justified on ROI [return on investment]. The ROI we are seeing for intranet installations is as high as 2,000%, with payback in as little as three months. Your company may have to spend some money on deploying an intranet, but it's going to pay for itself 20 times over.

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