Netscape has lost the upper hand in the browser battle to Microsoft, according to a new study by market researcher International Data Corporation.
In the first half of 1998, the study showed that US market share for Netscape's Navigator browser slipped nine points to 41.5 percent from its 1997 year-end share of 50.5 percent.
Microsoft's Internet Explorer gained nearly five percent during the same period, surpassing Navigator with a total US market share of 43.8 percent. That number includes America Online users, who receive a copy of Explorer bundled with their AOL software. Without AOL, Explorer's share drops to 27.5 percent.
"The results show a dramatic shift toward Microsoft Internet Explorer by mid-year 1998," said Joan-Carol Brigham, the IDC analyst who conducted the study, in a statement.
Netscape's (NSCP) tumble came despite an aggressive campaign to forestall market erosion in the last six months. In early 1998, Netscape began giving the browser away for free, entered myriad distribution alliances with ISPs and Web directory sites, and freed the browser's software source code to encourage programmers to develop new applications for Navigator.
Though Netscape no longer gets paid for the copies of Navigator that it distributes, it is vital to the company's business strategy to maintain market share. The default homepage option on the Navigator browser directs users to Netscape's Netcenter Web site, which the company has positioned as a competitor to Net directories like Yahoo.
"That browser represents the sole market advantage Netscape has versus other content players," said Ron Rappaport, an analyst with Zona Research.
Widespread deployment of the browser also helps the company sell its expensive Net-based communications and commerce software.
Netscape remained optimistic in the face of the new numbers, stressing that the study failed to take into account the 12 million copies of Navigator that users have downloaded from the Netcenter since its re-launch in June, after the study had ended.
"Downloads of Navigator have increased more than 71 percent since June, and they represent a very significant portion of Navigator's distribution," said Chris Saito, Netscape's director of client product marketing.
Saito stressed that Netscape still retains a big lead over Microsoft if AOL users are factored out. That's an important distinction, he said, since Microsoft can't control the default page of AOL's browser, and therefore can't direct users to its own portal site, MSN.com.
"Netscape is still 50 percent ahead of Internet Explorer, despite the fact that Microsoft has been employing extremely aggressive marketing tactics that are currently under investigation by the departement of justice."
Microsoft (MSFT), meanwhile, attributed the gains to the superior technology of the 4.0 version of Explorer.
"With IE 4.0 we really opened up a product quality gap between Microsoft and Netscape," said Mike Nichols, product manager for Windows at Microsoft. "We virtually swept all the product reviews."
Netscape's stock dropped US$1.19, nearly 5 percent, to close at $24.
