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Dec. 24, 2007 at 8:03am Eastern by Greg Sterling
From Browser To Digg Clone: The Short, Unhappy Life Of Netscape
Netscape has been reinvented several times since its acquisition by AOL in November 1998 -- and all of these efforts have essentially failed. In addition to a browser, the Netscape brand had been associated with a portal and discount dial-up ISP (and still is) before Jason Calacanis turned the site into a Digg clone in late 2006. In retrospect, TechCrunch says, the Calacanis effort was a failure. (Calacanis left AOL in November, 2006 and launched Mahalo in May, 2007.)
TechCrunch reports comScore numbers that chronicle 2007 as a year of traffic in decline for Netscape as a "social voting" site.
As most people recall, Netscape created the first commercially available Web browser in 1994, charging prices that ranged from $49.95 to $89.95 for its flagship Navigator product and a suite of other software. In 1995 the company went public in one of the Internet's first big IPOs. But feeling threatened, Microsoft developed Internet Explorer (IE) and then began giving it away for free with Windows 95, undermining Netscape's core business model.
As free (and bundling with the OS) proved to be too much of a temptation for people, Netscape made the decision to offer Navigator for free by early 1998. (At that time, the company also switched to open source code and started the Mozilla project.) But by the time Navigator was forced to go free, IE had caught up with and was starting to surpass Netscape's market share. Later that year, Netscape was acquired by AOL, then a partner, in a stock transaction worth an estimated $4.2 billion.
What happened next was remarkable. Netscape was still arguably one of the Internet's powerhouse brands at the time of the acquisition. AOL, then too a dominant player, was using IE as the core of its own AOL browser. AOL continued to rely on IE, rather than switching to the Netscape browser. But there's also a complicated legal history here, which clouds the story somewhat (involving a suit between AOL and Microsoft that gave the former a royalty free license to IE, as well as a cash settlement of alleged anti-trust abuses). Nonetheless, AOL essentially neglected the Netscape brand and failed to promote it among consumers at a critical time. It thus became a wasting asset.
Accordingly, the considerable brand equity that Netscape had started to leak out, and by the time Calacanis got hold of it in 2006 there was virtually nothing left. One could thus argue that his effort to reinvent the brand was worthy, even if the Digg clone concept was uninspired. Propeller.com: New Home For The Netscape Social News Site covers how the clone was removed from the Netscape brand in September.
The Firefox browser, based on the Mozilla/Netscape code, has slowly gained market share against IE since its launch in November, 2004. Estimates vary, but Firefox is reported to have a near-30 percent market share across Europe and something between 9 and 14 percent in the U.S..
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By Greg Sterling
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