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Netscape's New Course: The Business Portal

News: Analysis & Commentary: THE INTERNET


Its aim is to make Netcenter the heart of corporate intranets

For months, Netscape Communications Corp. has been looking like an Internet has-been. As portal sites such as Yahoo!, Excite, and Lycos scooped up enthusiastic Netizens, Netscape--the original Internet company--idled. Battered from its Web browser war with Microsoft Corp. and late to the portal game, Netscape seemed stuck in the slow lane.

Now, Netscape has a new plan to get back in the game. On Oct. 8, the company was scheduled to announce a strategy to make its NetCenter site the portal of choice for businesses. The idea is to make NetCenter the heart of corporate "intranets" by using it to blend corporate information--sales updates, stock quotes, travel, or expense policies--with a customized selection of fare from the World Wide Web.

It's another move in Netscape's six-month-old strategy to concentrate on corporate Internet technology. Yahoo! and Excite have developed consumer audiences that are generating hefty advertising revenues, but they don't yet have the contacts and technology to address the business market. The only viable competitor is PointCast Inc., which sells a similar service to companies like Hewlett-Packard Co. Says Netscape Executive Vice-President Mike Homer: "This is an area where we have more experience than anyone."TRAFFIC PROBLEMS. Netscape isn't conceding the race for consumers. NetCenter is still the fifth most visited site on the Web and generates $39 million in ad revenue as a result--about 26% of Netscape's $150 million in revenues, in the quarter ended July 31. But many of those visitors are automatically directed to the Netscape site when they use Netscape's Navigator browser. With Netscape's browser share falling to 41.5%, from 50% in the first half of 1998, according to International Data Corp., the company needs to drum up more traffic.

Corporate portals could help. If Netscape succeeds in signing companies up for the service, it stands to add new visitors to NetCenter by the wagonload, roping in every employee with a PC. Visteon Automotive Systems, for instance, a $17 billion auto-components division of Ford based in Dearborn, Mich., is making plans to hook up 12,000 employees in 21 different countries to NetCenter.RENT THIS SPACE. How will Netscape make money off its corporate portal business? The same way it does now--by selling ads and network links to businesses that want to reach NetCenter visitors. Those ads would appear only when corporate users venture outside the business intranet--still using the NetCenter filter--to get their fix on the Web. Next spring, according to Homer, Netscape will begin adding links to company-approved vendors such as office-supply companies or software stores--with those vendors paying Netscape for that real estate.

For all the promise of corporate portals, analysts aren't changing their earnings estimates yet. Homer wants business services to add 20% to 30% to NetCenter's revenue stream, projected to reach $44 million in the quarter that ends Oct. 31. "It's an important strategic sales tool," says Daniel H. Rimer, an analyst with Hambrecht & Quist LLC. It could also be coming to a desktop near you.By Paul C. Judge in Boston, with Steve Hamm in San Mateo

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