Opera Awaits Its Curtain Call

Its compact, speedy browser may soon rule a growing niche

Iceland native Jon S. von Tetzchner, co-founder and CEO of Norway's Opera Software, is one unconventional Internet entrepreneur. In 1995, as Microsoft Corp. and Netscape Communications were gearing up for their multibillion-dollar battle of the browsers--the software that locates and displays Web pages--von Tetzchner launched Opera, now the No. 3 player in the business. He began with just $6,000 and for four years financed his venture solely on sales, a novel concept for a Net startup. During the dot-com boom, he turned away investment bankers eager to take his company public. "Having a stock going way up and way down would have been too distracting for the engineers," says the 34-year-old. "We needed them to concentrate on software."

Thanks to von Tetzchner's conservative strategy, Opera is among the survivors of the tech meltdown. Its speedy browser has won a cult following. And as the market for browsers expands from the personal computer to mobile phones and a host of other Internet-connected devices, Opera's roster of customers keeps growing. Sony's new $500 eVilla computer, designed just for Web surfing and e-mail, is powered by Opera's software. And next year, Opera's browser will start appearing in Nokia and Ericsson Web-surfing phones. Opera Chief Financial Officer Christian Jebsen expects revenues from these licensing deals to push the company into the black by 2002. It posted a $1 million loss last year.

To be sure, with $3 million in sales last year, Oslo-based Opera is tiny compared with its burly competitors. Besides, big rivals such as Microsoft and Openwave Systems Inc., a company that develops software for the mobile Net, are pushing a host of network-based services, from e-mail to instant chat. And to funnel customers to these services, they give away browsers and search engines. "If they figure out a way to make money in this business, I want to buy them dinner," says Robert O'Hara, Microsoft's product unit manager for microbrowsers. Yet Opera's CEO is gambling that corporate customers will continue to pay for an independent browser they can stamp with their own brand and customize--a luxury Microsoft doesn't permit.

LESS IS MORE. What's more, this underdog has a technical edge over a behemoth like Microsoft. Von Tetzchner and Opera co-founder Geir Ivarsy were on to the Internet long before the gang in Redmond. The two men met while working on Web development at Telenor, the Norwegian phone company, in the pioneering days of the early 1990s. Opera's desktop browser takes up only two megabytes, a third the size of Microsoft's smallest version of Explorer. Size, along with speed, should be an advantage for Opera as browsers move into tinier and less powerful machines.

This potentially vast market has been slow to take off. Von Tetzchner and his 115-person crew, however, are in no rush to cash in. Opera is debt-free and, since it is 90% employee-owned, largely invulnerable to skittish financial markets. Despite the Net bust, von Tetzchner managed to raise $3.5 million this year in a transaction that valued the company at $140 million. Back in 1999, when he closed his first round of venture financing, raising $1 million from Norwegian investors, the company was valued at only $50 million. Opera is burning through about $500,000 per month and will probably need more financing next year. But investors don't seem worried. "They control their costs, and there are lots of interesting deals out there," says Tore Mengshoel of Oslo's Teknoinvest, a venture-capital fund that owns a minority stake in Opera.

Opera's CEO is willing to concede that Microsoft has "probably" already won the battle for the PC desktop. But he's not about to surrender in the fight for next-generation machines, a more fragmented market with devices running on a host of non-Microsoft operating systems, from Linux to Unix to EPOC, the system used by Symbian, a London-based consortium of mobile-phone makers. Now it's up to von Tetzchner to prove that, like any accomplished tenor, he can hold a note.

By Stephen Baker in Oslo

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