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Free help. That's the offer Netscape Japan made last year to a number of blue-chip companies. Borrowing from its U.S. playbook, Netscape proposed sending in its engineers to potential customers to figure out the best way a company could use the company's new SuiteSpot package of server software. The idea was to get critical feedback on SuiteSpot's performance, land some fat contracts, then boost sales of the software needed for corporate intranets and Web sites.

Then came the shock. Almost no one was interested in Netscape's offer. The general response: We don't care how you do it in the U.S, we don't need help from you in testing your software. ''They have pride in their own people and technology,'' said Shinichi Sugihara, country manager at Netscape Communications Japan Ltd.

ROUGH SLOG. The episode highlights just one way in which Netscape's assault on the Japanese corporate market is running into resistance. That's not to say that Netscape has failed in Japan. Check out most Tokyo cybercafes, and you'll see trendy Japanese roaming the Net with Netscape's browser. Netscape claims that its browser is found on 80% of all network-linked PCs in Japan-a higher ratio than in the U.S. And despite the rough slogging in the corporate world, Netscape has landed Hitachi Ltd. and NEC Corp. as customers. Sugihara aims to push up Japan's contribution to overall Netscape revenues a few points, to just above 10%, or about $55 million, in 1997.

Yet it's essential to make deeper inroads into Japan Inc., where, as in the U.S., the real profits come from providing server software. It's a hard climb, given the conservative nature of most Japanese companies. ''The problem is finding a way into a Japanese keiretsu without having a track record,'' said Shinichiro Wakahara, industry analyst at Dataquest Japan.

One way in is to line up big systems companies--including Fujitsu Ltd.--as distributors. These giants can sell to other giants. The risk is they can also push Microsoft Corp. or their own software. Fujitsu, for example, sells a groupware product called Teamware. Inevitably, the market tends to favor home-grown software.

A final obstacle to accelerating to Internet Time in Japan is the gap between American and Japanese attitudes toward the latest software. The intranet market, for example, is still immature, and most companies are just getting going on E-mail. U.S. technology managers are often willing to commit to software that's just being developed. Such risk-taking never occurs in Japan.

Sugihara must sell into this market with a shoestring staff of only 18, operating from cluttered offices in central Tokyo. The bare-bones approach worked when Netscape's main product was a browser that any PC owner could download from the Net. But snaring corporate business requires a bigger commitment. Netscape Japan's staff size will double soon, but that might not be enough. Microsoft Corp. Japan already employs more than 1,300 employees. Admittedly, Microsoft sells many more products than Netscape. Yet the size and solidity of Bill Gates's company, and its dominance in operating systems, is reassuring to Japanese managers worried about system reliability.

Tough obstacles. Netscape is still enthusiastic about Japan, yet here, as in the U.S., Netscape will be the scrappy underdog for a long time to come.

By Steven V. Brull in Tokyo

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Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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