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============================================================================= Seidman's Online Insider ============================================================================= Weekly Summary of Major Online Services and Internet Events ----------------------------------------------------------------------------- Vol. 2 No. 47 (Formerly known as In, Around and Online) December 10, 1995 ============================================================================= Copyright (C) 1995 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes. IN THIS ISSUE ============= -Web Wars -MSN is Here to Stay -Web Wars Miss the Point, Says AOL Chief -This is MNNN? -MSN's Loss is Prodigy's Gain? -Stock Watch -Disclaimer -Subscription Info Web Wars ======== A long, long time ago... (it really works better if you play the theme music in your head.) *Java Power for the People* Netscape and Sun Microsystems jointly announced JavaScript, an object scripting tool for Sun's Java. JavaScript will facilitate the development of online Java applications for the web by allowing creators of Web sites to take advantage of Sun's Java programming language without an intimate knowledge of Java. A slew of industry leaders ranging from America Online to Oracle announce plans to adopt JavaScript. It's hailed by industry leaders (but mostly by Netscape and Sun) for being a cross-industry open standard. *Sleeping Giant?* For a few weeks it has been known that Microsoft planned to announce their Internet strategy on December 7 (Pearl Harbor Day). The announcements, while on the surface may not seem earth shattering, the basic premise of the meeting, even espoused by Bill Gates is that the "sleeping giant has awakened". The announcements and demos coming from the Internet Strategy workshop were clearly a missile pointed directly at Netscape, and to some degree America Online. But for all of the news that came out of Redmond this week, what does it all mean? I don't think we'll know for a while. 'What it is, what it was, what it shall be.' If Walter Cronkites words were a question applied to Microsofts Internet strategy, the answer would be different every time...(note that, per its strategy white papers on its Web page, Microsofts Web authoring tool strategy has changed three times in the last six months)," wrote Morgan Stanley's Mary Meeker, a top ranked PC Software analyst who covers PC Software and hardware, as well as new media and Internet/online. I agree. And that's the way it is... *It's About Applications* Microsoft said they planned to give away "plug-ins" for existing Microsoft applications (i.e., Word, Excel, etc.) that would allow these programs to take advantage of the Internet. This may sound like a small thing, but from a marketing point of view it is huge. If the Internet becomes part of everything they make, the message gets out to millions and millions more people. *Free Billy* It's free. Cut through everything else, because for the end user, that's the most important thing to know. Microsoft's Internet browser, a Spyglass enhanced version is free and will remain free. Netscape's browsers have been "free" too, but not quite as free (if you go beyond evaluation, you're supposed to buy it). Of course, with the perpetual beta in progress, there's always a totally free Netscape beta browser around. Microsoft Internet Information Server (formerly known by the code-name Gibraltar), Microsoft's Web. You'll need NT to use it and that works out well for Microsoft. Those already running NT will consider trying it and others who want to run Microsoft's server will buy NT. *If You Can't Beat 'Em..." Microsoft has licensed has licensed the Java technology for its own browser. Some of the press I read, would have you believe that Java was as popular as its coffee namesake. The licensing is definitely good news for Sun, but not exactly bad news for Microsoft. To date, Java has been widely acclaimed, but little used. Not many Web sites are doing much with Java. c|net scrolls its news headlines in a banner via Java, and there are samples of updating stock quotes and sports scores via Java. These are nice uses, but nothing overpowering. Sun's biggest problem is that not that many people are developing applets for Java. JavaScript will surely change that, some. Meanwhile Microsoft has hundreds of thousands, if not MILLIONS of developers who develop software based on Microsoft protocols. Microsoft announced their own Visual Basic script language, which will work similarly to JavaScript, except it will be used to develop online applications that take advantage of Microsoft's Visual Basic. Microsoft licensed Java for one reason. Netscape is their competitor and they have it. It's that simple. *Other Microsoft Internet Briefs* -CompuServe announced it was licensing Internet Explorer for its online service, thus putting to bed the Spry browser they'd previously used and seemingly making it seem like a 2 horse race for the browser market. -Plans for Windows 3.1 and Mac versions of the Internet Explorer browser were announced. -Plans for ActiveVRML a Microsoft version of 3D Virtual Reality technology for the Web. Microsoft has submitted an open specification for ActiveVRML. -Microsoft and Oracle announced collaboration on Internet Technologies. Microsoft will license Oracle PowerBrowser OCX software and distribute it to Microsoft's third-party developer customers for their use. Oracle will license Microsoft's Visual Basic Script for inclusion in its s Macintosh and Windows operating system-compatible Oracle PowerBrowser products. -Microsoft proposed to an Internet digital signature initiative which provides a safer environment for executable code on the Internet. (i.e., to protect from getting a virus via a Java or Visual Basic applet running on the Web). *In Netscape We Trust?* In remarks to a Price Waterhouse software industry forum in Redwood City, Ca. James Barksdale, Netscape's CEO discussed the "dog-fight" Netscape would have with Microsoft. "It's a tough fight -- I'll grant you that -- but we're brave," Barksdale said. "We're well financed. We believe that God is on our side," Barksdale added, according to a story by Reuters. Thank you Reverend Barksdale. "Most people ... are tired of being obligated, controlled by, licensed by and tied down to one company," said Barksdale according to Reuters referring to Microsoft's dominance in the software market. I think a lot of people in the industry feel that way. On the other hand, a lot of people besides Microsoft are making a lot of money because of Microsoft. Truth is, "most people" don't care one way or the other. If it were some little non-profit company involved, I might buy Barksdale's position. He's right to think Microsoft wants to control the standards. There's a lot of money in that. But Barksdale wants to control standards too, that's where the money is. So are he and Netscape really holier-than-Bill and Microsoft on that issue? What Netscape has on its side today is a superior browser. Still, Microsoft narrowed the gap with the most recent version of their Internet Browser (2.0). Netscape's 2.03 beta for Win 95 is faster (albeit only slightly over a 28.8 line) than Microsoft's 2.0 browser, and it has Java. Now Microsoft will have Java too. The one thing Microsoft's Internet Explorer doesn't have that Netscape does is "plug-in" capability where third party developers or Netscape can develop applications that run within the browser. Macromedia's <http://www.macromedia.com> ShockWave, which was announced this week is one such example of a plug-in for Netscape. ShockWave allows creation of full multimedia presentations with Macromedia's Director software that will run on a Web page with Netscape's browser. The integration that comes via the plug-in is very nicely done. Netscape plans other plug-ins, most notably one for Adobe's Acrobat. Currently downloading an Acrobat file will bring up a separate application (Adobe's Acrobat reader). Once the plug-in is developed, you'll just be able to go to the link and read the document, in Acrobat format directly in the browser. In order to keep an edge over Microsoft, Netscape will have to continue to develop the next new and better thing. As fast as they have run, they're going to have to run even faster. In the Final Analysis ===================== Mosaic dramatically changed things by bringing us a multimedia Web browser. Netscape then made a MUCH better browser than Mosaic. Java is cool, but to date, it has far less impact than either the original Mosaic or Netscape. So who wins in a Netscape/Sun vs. Microsoft/Spyglass war? We do. Netscape isn't going anywhere for now and certainly Microsoft isn't going to go away. Competition for Microsoft should be viewed as a good thing -- even by Microsoft. And I don't think we'll be seeing Netscape putting Microsoft out of business anytime soon. Microsoft dominates the desktop and it is on the Microsoft platform that most of the Netscape browsers are running. Microsoft is dominant in the applications market too. This is something to think about because there was a time when Microsoft Excel and Microsoft Word were running very, very far behind Lotus 1-2-3 and WordPerfect respectively. Today Excel is the number one spreadsheet application and Word is the number one Word Processing application. Mary Meeker noted how Microsoft's Web server strategy has shifted 3 times in 6 months. Well, that could be interpreted badly, but the landscape is shifting rapidly, and the ability to shift with it is critical. Meeker agrees that Microsoft's dominance gives them a huge advantage. 'Web Wars' Miss the Point Says AOL Chief ======================================== This month's letter from AOL chief Steve Case to the members of America Online included announcement of planned Internet related enhancements. Case said that Internet traffic accounts for roughly 15% of AOL usage and reported that each day, AOL averages 13 million (outgoing) hits to the Web, 4 million pieces of e-mail (half which go to the Internet) and about 70,000 postings to the newsgroups each day. Case announced plans to incorporate HTML 3, Netscape tags and Java into their browser. Case also admitted that they had a long way to go with the Mac version of the browser. But in his letter, Case said he felt it was about more than technology. Case said they would continue to work towards providing more than just an on-ramp to the content on the Web, and that making their web browser the best was a top priority. Case explained why he felt that AOL was the best of both worlds claiming added value through technology and packaging. Make it simple, make it fun and make it affordable is what AOL is striving to do according to the letter. I caught up with Steve Case online and asked him if the December letter spoke for itself as a response to the announcements from Microsoft this week. "It was not intended for that purpose," said Case, "but yes, I think the issues are the same." Case questioned industry insider perceptions with regard to the Internet. "I think there is to much "inside the beltway" perceptions within the industry about the Internet...and a presumption that what they as sophisticated users want is the same as what a mass market of consumers are interested in." I commented that the numbers certainly support his thesis and he remarked that there was both quantitative and qualitative evidence. "All you have to do is listen to consumers," said Case. As for Web Wars, Case dismisses the notion that anyone outside the industry (or anyone not owning one of the Web related stocks) really cares about the Web wars. "The industry is obsessed with the Microsoft vs. Netscape nuclear war," said Case, adding "most consumers could care less, and are much more interested in basics like when the 2400 baud access number in their city will be upgraded to 14.4 or 28.8. Case admits that technology is critical and that the Web is a central part of the future of online service, but believes that some of the new entrants into the arena are presuming many things "about what consumers want and how they want it". "I think over the next year there will be many disappointments," said Case. MSN is Here to Stay =================== Netscape's Marc Andreesen was recently quoted saying that Microsoft made a horrible mistake by trying to build a proprietary online service, and now they're backpedaling. When they started the MSN vision several years ago, there was no Mosaic, and by the time the Web really began to hit its stride, the proprietary MSN client had already been developed and was in Beta. It's true that Microsoft announced that they would try to position MSN as a Web site and planned to offer MSN content on the Web either via subscriptions, or a la carte (requiring a secure "secure transaction" technology". It's also true that Microsoft has said that it's changing its approach for acquiring content providers. Here, Microsoft admits that they can't compete by trying to aggregate all of the content already available on the web. Instead, they will try to move from "subscriber only" revenue, to a mix of subscriber and advertising revenue. They'll also try to seduce some content providers into exclusives, and they'll create their own content (i.e. the content Michael Kinsley has been hired to put together). The old MSN isn't going away though. They won't abandoned the proprietary model they've already built completely. What today's MSN becomes is what it has been pretty good at since day one (if you had the plus pack or downloaded the Internet Wizard): one button access to the Internet. Today, some of Microsoft's plans from a multimedia standpoint can only be done via their proprietary MSN service (i.e., light versions of their reference works, Bookshelf and Encarta). As Russ Siegelman noted in last week's issue, the first version of Blackbird (now called the Internet Studio or some such) due out by '96 will only support development on the existing MSN platform. A version supporting the Internet is expected sometime during the first half of '96. While MSN may be repositioned as a mostly access service, I don't for a moment believe they're writing off further development of the proprietary MSN service. Prodigy, currently the number 3 service is looking over its shoulders and sees MSN running hard and fast to replace Prodigy in the top 3. With 600K users paying at least $5 a month, MSN in only 3 months is bigger (by far) than any stand alone Internet access provider or subscriber service (a la the ESPN and StarWave SportsZone). Detractors say the online services can't succeed because they are too expensive. But the perceived value of an AOL, CompuServe or Prodigy at $9.95 a month or an MSN at $5.00 is a better value in most consumers minds than the $15.00 and higher all you can eat "SLIP/PPP" connections to the Internet. But all the services will ultimately have an expanded $20/20 or $30/30 plan, which allow these services to competitive in what probably amounts to over 95% of the market. For users who use Internet services more than 7 or so hours per month, the ISPs indeed are economically better values. We should never lose site of the fact that most of the members of consumer online services are not using more than 7 or so hours a month. At $5.00 a month, the perceived value of the MSN connection to new users and "light" users is very high. At $20 for 20 hours, that takes care of most everyone else. Only the heaviest users benefit price wise from flat-fee and high volume plans that are available from Internet Service Providers. I'd grant that I and most of you reading this fall into the heavy user category, but on the whole, we make up a very small part of the market. Average hours of usage per month will grow with time, but as that happens, millions more users will come online allowing providers like AOL and CompuServe and MSN to drop rates even more. THIS IS MNNN? ============= We doubt James Earl Jones is waiting for the phone to ring but the Wall Street Journal reported on Thursday and Friday that Microsoft and the GE owned NBC were in talks about a 50-50 joint venture for an all news cable channel. ABC and NBC and Rupert Murdoch have made it known that they plan to compete with CNN. NBC has a potential leg-up on the competition because it already has a couple of cable networks, CNBC and America's Talking. America's Talking is slightly over a year old and already in about 20 million homes. The Journal reported that NBC is already considering canceling America's Talking and using the valuable slot (getting a new channel on a cable network is very difficult these days) for its all news service. The Journal reported that a central strategy to the venture is the possible linkage between the cable network and MSN. The channel would carry promotions for MSN and MSN would carry promotions for the channel. A news story on the TV network would advertise where more info could be found online, etc. Daily Variety reported on Sunday (for its Monday edition, according to Reuters) that Microsoft is in top secret discussions about buying a stake in NBC, possibly as much as 49%. Daily Variety reports that such a stake would easily cost Microsoft $4 billion. "There are discussions going on now that would put Microsoft in NBC's business and NBC in Microsoft's business," the report attributed to a source close to the discussions. MSN's Loss is Prodigy's Gain? ============================= Speaking of NBC, earlier in the year, AOL elected to not get into a bidding war for the NBC content that had been on AOL for over a year. Instead, Microsoft reportedly paid an astronomical sum to lure NBC over to MSN. Similarly, CNBC and America's Talking left Prodigy for MSN. Prodigy's president Ed Bennett has a television background, so it's not all that surprising to find out that Prodigy raided NBC and snagged two top online execs from NBC's online effort. Josh Grotstein, VP and GM of NBC OnLine Ventures, and Lisa Simpson, director of business development for NBC News, are headed to Prodigy to take on key roles in directing Prodigy's content vision. The two were jointly responsible for managing NBC's relationship with Microsoft. Considering the money allegedly paid, this is a big loss for Microsoft (even though they worked for NBC). AOL comes out looking pretty good in retrospect. Stock Watch =========== Smith Barney analyst Jonathan Cohen began coverage of several Internet stocks and began Netscape as a sell. UUNet and Spyglass were rated underperform and America Online was rate neutral. The Microsoft announcements played a part as well. This and That ============= Many things were announced this week, and most of them didn't make it into this newsletter. For you Web lovers, here is a sampling of places I visit on the Web to keep current with the news: Net Related -The Wall Street Journal's Money and Investing Page <http://update.wsj.com/> -c|net <http://www.cnet.com/> -CMP's TechWeb <http://techweb.cmp.com> -ZDNet (Ziff Davis) <http://www.zdnet.com/> -SimbaNet <http://www.simbanet.com/> -Educom's Edupage <http://www.educom.edu/web/edupage.html/> Others stuff I read regularly (checked at least weekly): -Ned Brainard's Flux column <http://www.hotwired.com/flux/> -Suck (not for everyone, but...) <http://www.suck.com/> -SportsZone <http://espnet.sportszone.com/> -CNN <http://www.cnn.com/> -USA Today <http://www.usatoday.com/> -Web Review <http://www.gnn.com/gnn/wr/index.html/> And of course, Dilbert! <http://www.unitedmedia.com/comics/dilbert/> See you next week! This 1 Week 52 52 Week's Price Week Week Company Ticker Close Change High Low ------- ------ ------ ------ ------- ------- @Net Index IIX $242.27 ($3.69) $259.85 $185.76 America Online AMER $41.13 $1.13 $46.25 $10.56 Apple AAPL $39.38 $1.75 $50.94 $33.63 AT&T T $66.13 ($0.62) $67.75 $47.63 Bolt,Beranek & Newman BBN $43.00 $2.37 $40.63 $12.63 CMG Information Svcs. CMGI $82.75 $6.00 $100.50 $10.81 FTP Software FTPS $34.50 $1.87 $40.63 $20.25 General Elec. GE $70.38 $1.75 $71.38 $46.50 H&R Block HRB $43.75 ($0.75) $48.88 $33.38 IBM IBM $96.88 $2.13 $114.63 $69.38 MCI MCIC $26.69 $0.19 $27.38 $17.25 Mecklermedia Corp. MECK $17.00 ($0.75) $24.38 $2.50 Microsoft MSFT $94.50 $8.25 $109.25 $58.25 Netcom NETC $51.00 ($19.00)$91.50 $16.75 Netscape Comm. Corp NSCP $128.50 ($8.75) $174.00 $45.75 NetManage NETM $28.25 $5.75 $34.00 $12.63 News Corp. NWS $21.50 $0.37 $25.13 $14.38 Oracle Corp. ORCL $46.63 $2.00 $48.75 $25.41 Performance Syst. Intl PSIX $25.25 $4.37 $29.00 $12.00 Sears S $39.00 $0.62 $40.63 $21.69 Spyglass Inc. SPYG $98.00 ($8.75) $121.00 $26.50 Sun Microsystems SUNW $99.75 $15.37 $95.00 $29.88 UUNET Technologies UUNT $55.00 ($21.25)$98.75 $21.75 Disclaimer ========== I began writing this newsletter in September 1994, at the time I was working for a technology company that is now owned by MCI. In March, I began working for International Business Machines Corporation. As of July, my management has agreed to allow me to do some work on the newsletter during business hours (probably about 6-8 hours a week). I speak for myself and not for IBM. Subscription Information ======================== To subscribe to this newsletter by e-mail: Send an e-mail message to: LISTSERV@PEACH.EASE.LSOFT.COM In the BODY of the message type: SUBSCRIBE ONLINE-L FIRSTNAME LASTNAME Example: Subscribe Online-L Robert Seidman If you wish to remove yourself from this mailing list, send a message to: LISTSERV@PEACH.EASE.LSOFT.COM and in the body of the message type: SIGNOFF ONLINE-L . A Web version of the newsletter is available at: <http://www.clark.net/pub/robert>.