Netscape speaks out on DOJ's Microsoft action

So what does Netscape think about the US Department of Justice action against Microsoft's browser licensing policies? Netscape have used a financial results conference call with reporters to declare that the DOJ must have a good chance of winning, that Netscape will win too if there is 'genuine choice of products' and, contrary to what Microsoft says, the browser and the operating system are too different products.

Officials at Netscape have used a financial results conference call with reporters to discuss the US Department of Justice's court action targeting Microsoft's alleged anti-competitive practices.

"I can't imagine the DOJ would bring an action if they didn't think they had a good chance of winning," said Peter Currie, Netscape's executive vice president and chief administrative officer. "We certainly don't view this as a silver bullet for us, and we'll be focused on the marketplace and not the courtroom. But we believe that when customers have a genuine choice of products, we will win."

The Justice Department yesterday asked a federal court to hold Microsoft in contempt for violating a 1995 court order barring it from engaging in anti-competitive practices and is seeking a fine of US$1 million per day against the software firm. The DOJ cited Microsoft's requirement that PC manufacturers license and distribute the Internet Explorer browser as a condition of licensing Windows 95.

Analysts say the outcome of the case may depend on whether Microsoft can convince the court that its browser is an integrated part of the Windows 95 operating system, rather than being a separate product that it requires manufacturers to bundle in.

"You can carry the OS description to an extreme," said Jim Barksdale, Netscape president and CEO. "But it seems obvious that there are some things that belong in an OS and some things that don't. These [the browser and the operating system] are two distinct products, and integration is a technique Microsoft is using to get around the consent decree."

The fact that Microsoft's browser runs on multiple operating systems shows it is a separate product, not a part of the Windows 95 operating system, he added.

Currie implied that Netscape's marketshare for its Navigator browser will increase if Microsoft is prevented from requiring original equipment manufacturers (OEMs) to bundle Internet Explorer with Windows 95.

"The consent decree was designed to prevent tying products together, the browser and the OS. The justice department thinks that happened, and to the extent that that stops it will be better for Netscape," Currie said.

"There's no question it would be good for all of us if the laws were enforced, because anyone competing would have a free market and potential access to all the customers out there," he added. "We feel it's important for us to have access to all our potential customers ... and that's what this is all about."

Asked if Netscape feels it was ever dealt with unfairly when it approached OEMs asking that they install Netscape Navigator on computers, Barksdale replied: "We can't say."

There is "no question" that Netscape goes head-to-head with Microsoft when it approaches OEMs about licensing its browser product, Currie added. "It's always been a case of them looking at us as an alternative to Microsoft," he said.

Netscape will not disclose how much revenue it earns from OEMs who bundle its products in PCs for the home. But Currie did say product licensing accounts for 72% of total revenues, and client applications specifically account for 38% of that figure.

"We see PC hardware OEMs as a distribution vehicle into the home. It's never been a substantial revenue opportunity for us. But it's an opportunity to gain marketshare," Currie said. "It's one part of our strategy to proliferate the client into the home, but it's never been a significant part of our revenue."

Earlier, Netscape announced that its third-quarter income was $11.7 million, or 13 cents per share, a 53% increase over income of $7.7 million, or nine cents per share, reported for the year-ago quarter. Revenues for the quarter, which ended Sept. 30, were $150.1 million, up almost 50% on revenues of $100 million for the same quarter last year, officials said.