Network: Witness for the prosecution
Netscape's Jim Barksdale will be first to testify in the Microsoft trial. He pleads his case to Mark Vernon
Monday 05 October 1998
Barksdale has won many firsts in his time with Netscape. Brought in when Marc Andreessen's cool, browser start-up hit the Wall Street big time, Netscape can claim to be in the corporate elite, now worth $2.5bn after only three years of having a commercial product.
He also must be one of the biggest risk-takers of all time, overnight turning the source of over half the company's revenue into a freebie - the Navigator browser, code and all.
Since then, in spite of the irresistible decline in its browser market share, the Netscape Web portal, Netcenter, is up to 9 million hits a day, and has subscribers growing by one million per month, which is a 5 per cent lead on Yahoo!'s equivalent service. And a further little-known fact outside of the Internet service provider community is that over half the "paid-for" servers on the Web run on the Netscape platform.
But there is a deep irony amid this success. The browser with which it all began has become, in a way, a burden. In the next few months, it will be fighting this legacy that occupies Barksdale's mind, both as he tries to make the famous "N" straddling the globe known for something else, and as he meets its great rival, Microsoft's Internet Explorer, in the courtroom.
Barksdale admits that he longs to do an interview in which web browsers are not even mentioned. When that happens, he will have at last reinvented the company and be free of his nemesis - Bill Gates.
The charge against Microsoft is one of anti-competitive, monopolistic practice. In capitalist America, that is tantamount to being done for blasphemy and it is the US government itself which is taking Microsoft on.
"I am a believer in free enterprise and capitalism," says Barksdale, "and I could never condone a monopoly. Bill Gates would be worth, what, a trillion? What do you want him to be worth? What is a company worth?"
The evidence, Barksdale believes, is plain for all to see: Microsoft levies a 33 per cent net margin on its products. "Why do you think they make such a margin? Because they don't have any competition."
Barksdale doesn't buy the argument that the dominance of Microsoft Windows makes the IT world an easier place in which to live because Windows provides a standard operating system to which developers can work and within which users can interact, or that prices are cheaper as a result. It is the same argument, Barksdale explains, that John D Rockefeller made in defence of Standard Oil. "The customers got oil for a lot less money when it was broken up."
But wait, Jim. Microsoft says the browser is now part of the operating system. The most important thing about a PC will be its ability to access the Internet. Isn't Microsoft simply meeting its customers' requirements and building in a browser for free?
"Shit no!" Barksdale snaps. "Why would I think that? Then your logic would say that Microsoft would be responsible for every feature and function and advancement that you need. They have not been able to prove they can do that with their core products. Why would they be able to do that with this product?"
But is not just free-market orthodoxy that Barksdale believes is offended by the Microsoft monopoly. When, for example, Compaq decided to put Netscape's browser on its PC's desktops, Microsoft issued a threat. It would cancel Compaq's Windows contract.
"There's no way that Compaq, the largest PC manufacturer in the world, could be in business without a Windows contract. Correct? That is a power that no one should possess, no matter how honourable and good they are.
"I am not accusing these guys of being evil," he continues. "It is just that that sort of power will lend itself to being abused."
For all the high-minded accusations Barksdale slings at Bill Gates, he has nothing against him personally. Indeed, it is another irony of the whole affair that one week they meet in Washington to lobby together for an easing of US encryption regulations, the next they are back on opposite sides of the fence.
But what's it like in the departure lounge, as they await to board their respective jets?
"We chat to each other. At the hearings ... when it was time for a break, we were both trying to find the men's room. Bill told me that he knew where this one was but that he had a exclusive contract on it," Barksdale cracks.
Did they form an alliance and use the same loo? "No, I went somewhere else."
Since its decision to give away its browser, Netscape has turned to two main sources of revenue: selling enterprise software and providing a commercial Web portal. Barksdale's aim is to become one of the major portal players, controlling the channels of information which come over the Internet, or the network into which it will have mutated in 20 years' time.
With regard to the former, he is also scoring well. Indeed, last week, amid a series of announcements which brought an impressive array of economic drivers to its electronic commerce offering, to say nothing of an alliance with enterprise giant, Hewlett Packard, Netscape sneaked in a win at BT, and over Microsoft.
Netscape will provide the backbone upon which BT will give free e-mail to subscribers of its Click Internet service. This will sting Microsoft, not least because it was over the sore subject of scalability that Netscape beat them to the contract. It is also precisely the kind of high-profile deal that Netscape needs in order to reposition itself.
However, Barksdale resists being triumphant. And not only for fear of upsetting BT. In a previous incarnation, as president of McCaw, a US telecommunications company, he was "ticked off" with the behaviour of one customer, Motorola, because of the way it simultaneously competed against him.
He has had the same experience, more recently too, in the portals business.
"Some of these companies like Yahoo! we regarded as sort of our compatriots. We were helping them, they were helping us," he says, lamenting the loss of more innocent times in the Internet industry. But under the influence of heady market capitalisations, Yahoo! became more combative, and now they run against each other with tempered aggression.
"Although the portal people might not like competing with me, I think they understand the necessity of my doing it. And I am doing it in it in a straight-up way," he says, reflecting, too, that he moved late into the portals game not least because he did not like the idea of competing in this way. "I learnt a lesson there and should have understood it sooner."
So will Jim beat Bill? Surprisingly, perhaps, his guess is he will not.
"We assume the worst but hope for the best." But the believes the case has far bigger implications than simply settling the browsers wars.
"It will be the definitive anti-trust action for the 21st century," Barksdale says, as the Standard Oil case was for the 20th century. And if Gates loses, he says: "I think it would make Microsoft a bigger, healthier company."
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