WEB BROWSER MADE INTERNET MORE ACCESSIBLE
Like Mosaic before it, Netscape Navigator was distributed for free over the Internet. Interested users could simply download it using a modem. It was an immediate hit, and Netscape claimed to have captured 70 to 75 percent of the browser market. Netscape Navigator featured an open architecture that enabled it to work with all kinds of computers and operating systems. The open architecture concept, known as TCP/IP (Transmission Control Protocol/Internet Protocol), was the same concept upon which the Internet was based. Netscape also sold an improved version of Netscape Navigator for $40. The company signed up resale partners, including Apple, AT&T, Hewlett-Packard, IBM, and others, and by 1996 was selling products in 29 countries. By early 1996 it had signed up more than 1,000 Internet service providers to distribute Navigator to their customers.
The easy availability of the Web browser created a lot of goodwill for Netscape, which the company hoped to capitalize on by selling high-priced software and Web servers that were used to build and run Web sites. Version 1.0 of Netscape's NetSite Web Server was released in December 1994. Netscape's Web servers, which sold for between $1,500 and $50,000 each, enabled companies to create online or "virtual" stores where customers could view products and purchase them online with credit cards. It was a time when electronic commerce over the Internet was in its infancy, and Netscape was providing a key element that would help it to achieve explosive growth in the coming years. Netscape also marketed its servers to corporate customers for their corporate intranets, where orders could run into the hundreds of thousands of dollars. Large companies found that Netscape's Web servers could communicate easily with outside networks, and Netscape gained a 70-percent market share among the Global Fortune 100 companies in the lucrative corporate intranet market. The first officially branded Netscape Enterprise Server product, version 2.0, was released in March 1996, and corporate sales accounted for some 80 percent of Netscape's revenue that year.
The development and introduction of Netscape Navigator drained nearly all of Netscape's capital. In order to raise more capital, the company sold an 11-percent interest to a consortium of media and computer companies that included Adobe Systems, International Data Group (IDG), Knight-Ridder, TCI, and Times Mirror. The next step was to raise money in the public equity market by going public. Without having turned a profit, Netscape went public on August 9, 1995. Its initial public offering (IPO) was one of the hottest of the 1990s and one of the first for Internet-based companies. The success of Netscape's IPO has been credited with starting the investor craze for Internet start-ups that lasted until the end of the decade. Netscape's stock was first offered at $28 a share. However, it was worth $75 after one day of trading and peaked at $171 on December 5, 1995. The company's first-day market capitalization was $2.2 billion.
Netscape enjoyed phenomenal growth from 1994 to 1996, with sales rising from $1 million in 1994 to $81 million in 1995 and $346 million in 1996. In April 1996 Netscape announced it had its best quarter to date, with earnings of $4.7 million on revenue of $55 million. Netscape improved on that later in the year with a quarterly profit of $7.7 million on revenue of $100 million. Barksdale commented that the company made too much money and should have used more revenue to build its business. After reporting losses in 1994 and 1995, the company turned a $21 million profit in 1996.
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