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Barksdale's stock purchase hints that Netscape means business

Barksdale's stock purchase hints that Netscape means business

Jim Barksdale definitely raised eyebrows recently when it was made public that he bought $US7.3 million of Netscape stock on June 1. Not bad for a guy who officially earns a salary of $US1 per year.

Barksdale's stock purchase is a clear exclamation point: he firmly believes Netscape is coming back. Given its actions, directions, and clearly stated focus on being a leader in the "Net Economy", Netscape has laid all its strategic bets down; now Barksdale has placed his personal one.

Although in the past I've been critical of Netscape's decision to release its browser source code and suggested that the company really needs new partners, it is good to see that Netscape is finally establishing an identity beyond Navigator. As Barksdale put it, Netscape has "gotten rid of the drug of the browser revenue". The company's new strategy leverages its two core business assets: the Netcenter Web site and its enterprise- oriented software offerings. The company's ultimate goal is to allow corporations to easily outsource, host, or create their own I-commerce environments.

The enhanced Netcenter site creates a compelling reason for the more lucrative corporate customers to visit Netscape's Web site more often. Unlike many consumers, business users haven't yet developed a strong loyalty to a Web portal.

Driving the "Net Economy"

Combining the existing popularity of the site today with planned promotional efforts, Netcenter seems destined to continue to be in the top five most popular Web sites worldwide.

For Netscape, capturing the attention of these business users will greatly enhance its claim of driving the "Net Economy".

The real opportunity lies in how Netscape is able to leverage this business audience. In its effort to create "enterprise service providers", Netscape hopes to play host to a variety of I-commerce services. As the company pursues computing nirvana, it is unclear that corporations will actually outsource this critical strategic asset. However, during its strategy rollout, Netscape did announce that it had enlisted several marquee customers.

Nonetheless, it is clear that Netscape has pinpointed the next big trend. Winners in this burgeoning business- to-business arena are going to prosper, not simply because of a cheaper price or flashier catalogues but because of the opportunity to change the dynamics of the underlying business relationships. As we see in successful extranet applications, the cost of doing business drops. You can create stronger relationships with your customers, suppliers, and business partners. You can add new revenue streams by forging new business relationships that just weren't possible in the more physical world.

Take for example Barnes and Noble's Affiliate Network (www.barnesand noble.com). Following the lead of Amazon.com, Barnes and Noble is offering approved affiliate sites the ability to create a customised bookstore page link that leverages the search and order processing components of their site. Each time a user buys a book, the affiliate gets a 6 to 7 per cent commission. To date, leading sites such as The New York Times, CNN, and USA Today have gained extra income and enhanced their customer offerings by this affiliate relationship. As a result of this extended relationship, they also get very detailed business information.

Creating this new type of extended relationship is core to Netscape's strategy. Given their corporate name recognition and site traffic, however, it seems that it is theirs to lose. Assuming Netscape can execute successfully, Barksdale's $US7.3 million stock purchase will be a great personal move - especially for someone earning a $US1 annual salary.


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