Lessons for Google in Netscape downfall

It's been 10 years since the initial public offering (IPO) of ill-fated Internet pioneer Netscape Communications Corp., and the often-told story of its rise and fall has inspired inevitable comparisons to the industry's current darling, Google Inc.

Like Netscape, Google had a wildly successful IPO, created a mainstream technology for optimizing Internet use and, as a result, has Microsoft Corp. gunning for them in the same way it went for Netscape's jugular.

And though the Internet landscape today is vastly different than the one that Netscape forged a decade ago, Google could learn a thing or two about how to do battle with the software giant in the coming years by taking a look back at the browser pioneer's defeat.

Microsoft Chief Executive Officer Steve Ballmer has made no bones about the software giant's quest to squash Google the way it buried Jim Clark and Marc Andreessen's baby in the 1990s. After the Netscape Navigator browser introduced millions of users to the Internet, Microsoft one-upped Netscape by integrating its Internet Explorer browser into its Windows operating system (OS), forcing the browser startup to scramble for a new business model. Eventually, America Online Inc. bought Netscape, and the Netscape browser technology now resides in the Mozilla Foundation project as the open-source Firefox browser, which, ironically enough, is making a comeback of sorts against Microsoft Internet Explorer.

"What do we want? More than anybody else has," Ballmer said recently about Microsoft's battle against Google in the search market. "We are going to invest: we'll invest in R&D, we'll invest in sales and marketing, we'll invest in advertising, we'll do what it takes [to win] on this front."

It seems unlikely that Microsoft will usurp Google's position at the top of the search space anytime soon. New data released Wednesday by Hitwise Pty. Ltd., an online market researcher, show that Google claimed 59.2 percent of searches across all major search engines in July 2005, a 14 percent increase in share versus a year ago. On the contrary, MSN Search captured only 5.5 percent of searches in the same month, lagging far behind second-place Yahoo Search, which captured 28.8 percent of searches in July.

Still, there are lessons for the Mountain View, California, search company to learn from the demise of Netscape, whose browser laid the groundwork for Google's present success. And chief among them is that Microsoft, with its billions in the bank, deep talent pool and reputation for trampling any company that threatens its core business, is not a force to be underestimated.

"Never take Microsoft for granted," said Joseph Laszlo, a research director at Jupiter Research. "Google is kind of a funny company in a lot of different ways, and one of them is it tries to run itself as if it's not a typical company. But I think where Microsoft is concerned, it's worth thinking as much like a big company as possible in order to understand why Microsoft does what it does and to effectively compete with them. [Google] should try to put itself in Microsoft’s head."

Microsoft's reasons for wanting to win the search engine wars are much the same as they were for winning the browser wars, according to another Jupiter analyst. Google's search technology, like Netscape's browser before it, threatens Microsoft's precious Windows operating system.