AOL Effectively Kills Netscape, Frees Mozilla

America Online (AOL) announced Tuesday that it was laying off 50 employees who worked on the Netscape Web browser and reorganizing development of the Mozilla project under which the browser is developed, signaling an end to Netscape and to the company's competition with Microsoft's dominant Internet Explorer. AOL was quick to downplay the news, noting that the developers represented less than 10 percent of Netscape's employees; the company also said that it would continue supporting current Netscape users and the Netscape Web portal. But with development of the core browser suite moving to a new independent foundation called the Mozilla Foundation, it's clear that AOL has finally given up on the browser market.

"Netscape remains a key part of our multibrand strategy," an AOL spokesperson said. "We will continue to support the browser and the portal." Last month, AOL signed a seven-year contract with Microsoft to use IE as the underlying technology in its market leading online software, ending speculation that it would move the product to the Mozilla technology on which the Netscape browser is based. AOL said that was because IE was better technology than its own Mozilla technology, an interesting decision considering recent end-user frustration with Microsoft's now-glacial IE development time.

In related news, AOL is transforming Mozilla.org into a non-profit organization called the Mozilla Foundation, which will oversee development of the Mozilla browser suite products, which consists of a Web browser (code-named Mozilla Firebird), and email and USENET news client (code-named Mozilla Thunderbird), calendar, chat, and HTML editor applications; additionally, hundreds of add-ons and accessory applications are also in the works for various purposes. AOL will donate $2 million to the foundation, and provide it with all of the Mozilla trademarks and logos.

Though AOL purchased Netscape in November 1998 for a whopping (and now obviously ludicrous) $4.2 billion, the actual purchase price was closer to $9 billion thanks to stock price inflation during the Internet bubble. The returns on AOL's investment have been less-than-fruitful for the company, as Netscape completely surrendered control of the browser market to IE and saw its share of the Web portal market fall to companies such as Yahoo, MSN, and the Google search engine. Netscape developers and a group of open source volunteers squandered any momentum they might have had when Netscape opened up the Mozilla source code, taking over five years to come to market. Today, despite constant improvements, Mozilla products barely register on Web browser market share surveys. Recently, Mozilla also saw its technology passed by when Apple decided to use a different browser technology for its popular (and arguably superior) Safari product. Mozilla was further embarrassed by an attempt to wrest the "Firebird" name and trademark away from an open source database project that had used it for years; despite claims by numerous Mozilla.org coders that they owned the name, the organization later quietly backed off and began referring to its browser as Mozilla Firebird instead.