Netscape's Initial Public offering

Company Background

Founded in April 1994, Netscape Communications Corporation provided a comprehensive line of client, server, and integrated applications software for communications and commerce on the Internet and private Internet protocol (IP) networks.

Netscape has been so successful to date because it entered the right market (i.e. the broad Internet market, a tremendously growing market) using the right technology (i.e. Web browser technology which enabled non-technical users to access information on the Web via graphical user interface) with the right strategy (i.e. to ÐŽ§give away today and make money tomorrowЎЁ strategy) at the right time (i.e. as soon as possible by purchasing the rights to certain Mosaic code). NetscapeÐŽ¦s strategy is to first set a new industry standard by creating a new client program, Netscape Navigator, to dominate the Web browser market (by 75%) within a year and to make use of it to destroy Mosaic in the shortest time. Having set the standard, Netscape would then be able to make money by sell server software to companies that wanted marketing access to potential consumers. This is so-called ÐŽ§give away today and make money tomorrowЎЁ. In order to be highly successful in the long run, Netscape had to speed up in making money from companies which were willing to pay a lot to have access to their potential consumers in order to turn around from operating a loss. It could be achieved by keeping its indisputable leadership of the Web browser market so that its client program became the only channels to potential consumers.

However, its current position was very risky due to the huge growth of its competitors, such as Spyglass, Microsoft, AOL etc., which challenged its position from different angles with their own technical advantages. Its competitors had much larger company size as well as net worth and most importantly with a much healthier financial status, which provided themselves with a solid financial background in the coming fight in the Web browser market. Therefore, Netscape had a strong capital needs for its technological investment to compete with its competitors.