Netscape UK fights for life in a tangled Web

Microsoft's battle to remain all-powerful in the British computer software market is being tested by the British subsidiary of Netscape, the upstart American concern which pioneered the concept of Internet browsers.

In one corner is mighty Microsoft, the company which enjoys a 90 per cent near-monopoly of desktop PC software and which is determined to extend its commanding position and become the dominant supplier of Internet software. In the other is Netscape Communications, a three year-old upstart company which invented the first commercial World Wide Web browser and which, despite a multi-million pound Microsoft campaign, still has two thirds of the Internet software market.

Netscape Communications UK is run by 38-year-old Stephen Voller, an ex- IBM manager recruited earlier this year to tackle the twin tasks of astronomical growth and a battle with one of the most powerful and aggressive companies in the world.

"We have grown 400 per cent this year and this creates unbelievable problems," says Mr Voller. "Six months ago our main switchboard number had to be ex-directory because we couldn't cope with the calls from the public and from our corporate customers. I bought a bigger switchboard, hired more people and changed that, but the problems of finding new staff and training them are horrendous."

Netscape UK was founded two years ago with three people, and now has a staff of 33 operating from rented accommodation near Heathrow. Most members of staff are dedicated to providing technical support for customers. In the next 12 months Mr Voller estimates that Netscape's sales in the UK will reach pounds 25m.

"One problem is that even Microsoft's legal department in Britain is bigger than my entire staff," adds Mr Voller. "That sort of competition creates the impression that it is safer to buy Microsoft products."

Microsoft employs 700 people in Britain and last week moved into a purpose- built riverside "campus" in Reading. The three-building complex is Microsoft's largest European property investment to date.

"A main issue is Netscape's ability to support its products," said Michelle Rushbridge, marketing director of ICL Multimedia, a systems integration company whose clients include the BBC, First Direct and NatWest, and which expects to achieve pounds 1m in sales of Netscape software in the next 12 months. "Quite often the UK office has to refer back to the United States on technical issues and that causes delay and confusion with customers. We are asking Netscape to improve this situation."

In the UK Netscape's software for Internet Web servers and Web browsers is distributed by Unipalm, and systems integrators such as ICL Multimedia are responsible for developing and extending the software to create Internet sites and corporate intranets.

"Netscape's share of the Web server market is holding up well, but the launch of Microsoft's new Web browser, IE4, has dramatically reduced Netscape's share of the browser market in a way which is quite unfair," said Mark Norman, managing director of Unipalm, Netscape's principal British distributor. "Giving away an application such as IE4 and calling it part of the operating system is a brutal misuse of Microsoft's monopoly position, but I hope this is going to be corrected by the court action in the United States."

This week Microsoft will defend itself in an American court against charges brought by the US Department of Justice that the company has violated a 1995 "consent decree" in which the company agreed not to exploit its monopoly in desktop computer software to gain advantage in other markets.

The Department of Justice alleges that Microsoft has done precisely this by insisting that PC manufacturers such as Compaq, who install Microsoft's Windows operating systems in the factory, must also install Microsoft's Internet browser. Microsoft is defending the action and claims its Internet Web browser has become an extension of its Windows operating system.