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In the January 22 press release, Jim Barksdale, Netscape's president, says,
by giving away the source code for future versions, we can ignite the creative energies of the entire Net community and fuel unprecedented levels of innovation in the browser market. Our customers can benefit from world-class technology advancements; the development community gains access to a whole new market opportunity; and Netscape's core businesses benefit from the proliferation of the market-leading client software.
Before examining the merit of Netscape's strategy, we will analyze the Web client software industry with an adaptation of Porter's "five forces" model.
Market Analysis: World Wide Web Client Software Market
Internal Rivalry • The desire for uniformity and compatibility generates network externalities that often leads to a winner-take-all market.
• Standardization in architecture and interface does not contain the fragmentation in implementation details which determine the consistency of the appearance of a Web page over different clients.
• The opportunity of tying extremely profitable products and services to a Web client product drives vendors to give the client away for free.
Entry • The initial development cost is low.
• A new entrant will succeed only if it has access to an effective distribution channel or it can offer drastic performance improvements.
Supplier • Software development tools may be monopolized on some platforms.
• Some prog ...