BW ONLINE DAILY BRIEFING

STREET WISE by Sam Jaffe	April 21, 1999

When Netscape Communications Corp. announced in January, 1998, that it would open up the source code of its proprietary Web browser, many observers assumed that the Mountain View (Calif.) company was throwing in the towel in its effort to compete with Microsoft Corp. After all, how can a software enterprise make money when it gives away its secrets?

More than a year later, Netscape still has little to show for its open-source experiment, and elegies are being written for it. Microsoft (MSFT) Senior Vice-President James Allchin has called Netscape's new browser "dead on arrival," and numerous press reports have described the initiative as on its last legs. Mozilla.org, the organization formed to oversee the development of Netscape's next-generation browser technology, suffered a major blow when its founder and key programmer, Jamie Zawinski, resigned after America Online officially took over Netscape.

Reports of the Mozilla project's demise may be premature, however. "Mozilla is certainly not dead," says Chris Nelson, the editor of mozillaZine.org, a Web site that tracks the new browser's progress. "Anyone who is familiar with it knows that there are lots of programmers who are meeting their goals and working very hard on it."

GOOD SHAPE. The problems that have occurred so far, according to Nelson, are run-of-the-mill development obstacles. He adds that Mozilla's developers have reached four of the nine deadlines they've set. That apparently puts the browser in good shape to meet a July deadline for beta testing.

If it does, it will be good news for America Online (AOL), which is currently completing its Netscape acquisition. While AOL's stock price probably won't rise or fall on the success of Mozilla, the Netscape Web browser was one of the primary assets AOL got when it bought Netscape. So the browser's success or failure will surely color the final judgment on the wisdom of the overall merger.

Mozilla will also be the first chance the public has to gauge the success of what may be the most visible open-source project to date. A preview of the so-called Gecko layout engine, one of the key components of a browser, was given to this reporter by Netscape engineers. It's small enough to fit onto a floppy disk, which makes it a fraction of the size of previous Netscape Navigator browsers or Microsoft Internet Explorers, version 5.0 of which was launched earlier this month.

The engine maximizes the speed at which a computer can load Web pages. It also minimizes the number of times the browser has to return to a Web server to refresh a page. Most impressive is the fact that the new browser so far meets an alphabet soup of standards for Web design that have been set by the W3C, the Web's preeminent standard-setting body. By meeting those standards, Mozilla will make Web design much easier.

The real question is how AOL will make money from the open-source browser. The answer is, in a word, indirectly. The key, say Netscape insiders, is Netcenter, Netscape's Web portal. "By maximizing Netcenter for [the new browser], we'll have the fastest and best portal around," says Eric Krock, the senior product manager for Netscape Communicator. "This is going to dramatically improve Netcenter content."

FEW VOLUNTEERS. There's more to it than that, though. The browser is to Netscape what the automobile is to Ford Motor Co. and the personal computer is to Apple Computer. Netscape will always be defined by its browser, even if it isn't a direct source of revenue. The open sourcing of the browser is a way for the company to reduce the costs of development for the next-generation browser while still keeping close tabs on it.

So why hasn't an army of programmers formed around Mozilla the way Linux, an open-source version of the Unix operating system that runs many computer networks, has attracted volunteers?

"It's a corporate open-source project and thus shouldn't be judged in the same way as a volunteer open-source project," says mozillaZine's Nelson, who is not affiliated with Mozilla.org. "But what they have gained through opening their code is hundreds of people who can test it, critique it, and fill in the gaps in the development process in a way that has never been done before. In addition, any programmer can take the code and help port it to run on a new operating system." Indeed, projects are already under way that will let Mozilla work with other operating systems besides Windows, including Macintosh, Be, and Linux.

Netscape has been pleased enough so far with the project that it's experimenting with open sourcing in a far different part of its business: its search engine. The new Open Directory, which is less than a year old, is now a primary search device on Netcenter, and even competitor Lycos is borrowing it to use as its new search engine.

LESS IMPERSONAL. Open Directory is compiled by more than 4,000 volunteers who classify and categorize Web sites based on their content. Unlike other search directories, such as Yahoo's and Excite's, Open Directory is prepared entirely by human hands. "The reason it works so well is because it is scalable," says Dave Beckwith, who's in charge of Netscape's search service. "As the Web grows, we get more people volunteering to work on Open Directory. Yahoo can't scale the same way. The bigger the Web gets, the more impersonal other search sites become. We're just the opposite."

The long-term success or failure of Netscape's open-source experiment is, in the end, up to America Online. How much patience AOL executives show for projects such as the new browser and the Open Directory will become a critical question in the months ahead. But you can bet that the rest of Silicon Valley is paying close attention to see if a proprietary software company can indeed make money from an open-source product.

Jaffe writes abouts the markets for Business Week Online

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