The likely demise of Netscape's Australian operations is no surprise to many of its channel partners, with some blaming a lack of brand awareness for the vendor's failure to adequately penetrate the local market.
Netscape had still not officially announced the fate of its local operations at press time, but sources claim the vendor is closing its Sydney and Melbourne offices and transferring responsibility for the Australian business to its South Asia headquarters in Singapore.
A statement issued by Netscape last week confirmed that "the way in which its products and services are sold in Australia would be adjusted following a change of business model in various territories around the world", but claimed "details of the new structure are unavailable at this time".
Services division to stay
The report went on to say: "However, Netscape's worldwide professional services division, responsible for application design and implementation consulting, will remain in Australia, and all major corporate and government clients and business partners will continue to receive support from Netscape."
The worldwide professional services division supports two of Netscape's key customers, Hewlett-Packard and Telstra.
Imogen Boas, the vendor's marketing manager, told ARN that local officials had been instructed not to make any further comment until a clarifying statement is released later this week.
But the sudden closure last week of Netscape's Hong Kong office indicates that Netscape is unlikely to maintain an Australian subsidiary much longer.
Speaking to ARN's sister publication, ComputerWorld Hong Kong, Catherine Xu, Netscape's director of marketing for Asia-Pacific, admitted the vendor is revamping its channel strategy in certain markets around the world to increase profitability.
"The reason for the restructuring in Asia-Pacific is really trying to see which sales model is functioning well right now and how we can cut costs," Xu said.
"Because our company strategy going forward is looking to increase our profit margins, cutting down costs is just as important as increasing revenue."
But with its strategy of cutting costs, Netscape may have shot itself in the foot, if the reactions of some of its channel partners are any guide.
"Like all organisations looking to be on everyone's lips, Netscape needed to spend millions of dollars to create a demand and that hasn't happened," Anthony Crisafulli, marketing director of Adelong Computers, claimed.
"Being so price conscious, they couldn't afford the dollars it took to get into this market seriously."
Despite working with Netscape directly on several sales and marketing projects, Crisafulli said the vendor's profile remains "fairly low" in his customer base.
Sven Urlich, managing director of Boomerang Software, has noticed a similar trend.
"Microsoft is a much more well-known brand than Netscape amongst consumers," he told ARN. "It is really only the proficient users who know it."
Good brand, goodwill
But Andrew Wilkins, director of marketing at The Fulcrum Consulting Group, claimed Netscape "is a very good brand" and that "there is a fair amount of goodwill to the company" among corporate customers.
Ross Cochrane, sales and marketing director at Express Data, one of Netscape's local distributors, also believes Netscape is holding its own in the local market. Indeed, Cochrane claims the vendor has just begun to really make an impact in the enterprise space.
"Netscape have been gaining ground and we've seen a strong performance from them over the last few months since they began focusing on the enterprise after the browser market no longer presented a revenue opportunity for them," Cochrane said.
"It had taken some time for their sales efforts to work but we've started to see some large volume deals for their server products lately and I had the impression they were travelling along pretty well."
Express Data has always dealt directly with Netscape in the US for the supply of its products, but the distributor has teamed with the local subsidiary on a number of sales and marketing initiatives.
However, Cochrane expects the channel to notice little change if Netscape's Australian operations do close down.
"The company's ability to support their products and to market the brand via the Web is very strong and, as most of the people they appeal to are Web-literate, they are well placed," he said. "I believe they'll still be able to offer similar levels of support."