NetObjects explained

NetObjects, Inc.
Type:Incorporation
Foundation:1995 (closed 2001, re-established 2009)
Location:Redwood City, California (1995–2001)
Doylestown, Pennsylvania (2009–present)
Key People:Samir Arora, founder
Steve Raubenstine, President and CEO
Products:Web design applications, Content management systems
Revenue:$34.2 million USD (2000)
Num Employees:~240 (2000)

NetObjects, Inc. is a software company founded in 1995 by Samir Arora, David Kleinberg, Clement Mok and Sal Arora. The company is best known for the development of NetObjects Fusion, a web design application for small and medium enterprises with designers who need complete control over page layout and a similar user interface as desktop publishing applications.

In its first phase, NetObjects was based in Redwood City, California, and ceased operations in 2001 after selling its assets to Website Pros (now Web.com) and a portfolio of patents to Macromedia.

In 2009 NetObjects was re-established as an independent software company.

History

Beginnings

From 1992 to 1995 the founders of NetObjects had worked at Rae Technology and before that in part at Apple Computer investigating proto-types of web browsers, information navigation and web design tools.

In 1995 NetObjects was founded to market NetObjects Fusion, a new design tool to build web sites. The term "web site", well-known and widespread today, was created by the work of Samir Arora, David Kleinberg, Clement Mok and Sal Arora. and they were awarded the first web site builder patent as inventors.

Initially NetObjects was as a privately held company with the Series A venture investment led by Rae Technology, Series B by Norwest Venture Partners and Venrock Associates, followed by Novell,[1] Mitsubishi and AT&T Ventures and the last round by Perseus Capital, L.L.C.

In April 1997 IBM invested $100 million to acquire a majority of the company. The deal had a valuation of $150 million.[2] [3] [4]

Launch of NetObjects Fusion and IPO

NetObjects Fusion 1.0 was released in 1996. As the first complete web design tool it was seen as groundbreaking by technology observers. NetObjects was elected as one of "25 Cool Technology Companies" of 1996 by Fortune.[5] Also in 1996, NetObjects Fusion won PC Magazines Editors' Choice award. CNET's Builder.com elected Samir Arora one of the Web Innovators of 1997,[6] and in 1998 NetObjects received the prestigious Gold award from the Industrial Designers Society of America (IDSA).[7] [8]

Eleven U.S. patents were granted for Internet-related technologies (design and utility).[9] [10] [11] [12] [13]

Releases 2.0 (1997) and 3.0 (1998) of NetObjects Fusion again gained positive reactions by the PC press as well as commercial success on the market. In 1999 IBM brought NetObjects to the stock exchange with initial public offering while remaining the major shareholder. The initial public offering (IPO) on NASDAQ raised $72 million.

The board of directors consisted of six people: Samir Arora as chairman of the board, chief executive officer and president, and five directors, including John Sculley from Apple Computer, three representatives from IBM and one from Novell.

Success on the market and the stock exchange

In the following years numerous product-bundling deals[14] were made with nearly all the big PC sellers like Dell and HP,[15] and with Internet service providers like UUNET, Earthlink or 1 & 1 (Germany). The company itself said it licensed the distribution of more than 15 million copies of NetObjects Fusion.

In 2000 the stock price of NETO (ticker symbol) reached its record high of $45 11/16 USD, making NetObjects worth $1.5 billion.

Revenue had started at $7.2 million in 1997, reached $15 million in 1998, $23.2 million in 1999 and peaked at $34.2 million for fiscal year 2000 (October 1999 - September 2000).

On March 3, 2000, TheStreet.com's Adam Lashinsky praised NetObject's financial performance and its early adoption of e-business:

"And, more so than many start-ups, NetObjects has managed to deliver on what it has promised. It has slightly beaten the expectations of the friendly analysts who follow it. And quarter by quarter, it has steadily reduced its operating losses. Plus, it got lucky. It was firmly entrenched as a business-to-business software company before the term gained currency and B2B companies took off."[16]

Shift in strategy

In 1998 the company had developed and since then distributed NetObjects Authoring Suite[17] [18] and the related "Collage" product,[19] which as content management solutions were aimed at big businesses and ranged at much higher price levels than NetObjects Fusion.

However, IBM and NetObjects decided that its target market was the sector of small and medium enterprises, so it would focus on its flagship application NetObjects Fusion which would fit within the scope of these customers.[20]

In the beginnings of the concept of "software as a service" (SaaS), the company secondly made a bet on its ability to recognize technological trends[21] and coined a strategy shift to a subscription model.[16] To this end NetObjects Matrix[22] was developed and GoBizGo.com, an e-commerce solution[23] was started. Subscribing web and online services would help small businesses keep pace with the Internet.[20] To finance this shift of strategy, the NetObjects Enterprise Division with 40 employees along with two applications, Collage and NetObjects Authoring Suite, was sold for $18 million to UK-based Merant[24] [25] (merged in 2004 with Serena Software Inc., based in San Mateo, California).

High hopes were based on the NetObjects Matrix platform and its possibilities to position NetObjects as a "Business Service Provider". A version for Mac was announced,[26] and a cooperation with IBM Global Services was forged.[22] [27]

Challenges and crisis

However, several factors led NetObjects to a crisis starting in 2000.[28] Tough competition from Microsoft, Macromedia and Adobe put pressure on market share and falling prices of web-design applications affected revenues.[29] Also, long-term revenue effects of bundling deals in the software industry are controversial.[14] NetObjects slashed prices for NetObjects Fusion from release 1.0 to release 4.0 by more than 50%. Older versions stayed in distribution for even lower prices. Technical demands for large business web sites changed and required direct access of programmers to HTML code — which NetObjects Fusion was not designed for.[30] Its target market were designers who need complete control over page layout and a similar user interface as desktop publishing applications.

IBM decisions and sale of NetObjects

In 2001 revenue decreased sharply,[31] a result of changing markets, price cuts, strategy shift to Software as a Service. Subscription fees from NetObjects Matrix started coming in but the company faced losses: total revenues for the first three quarters of FY 2001 were $4.22 million, whilst costs were $7.67 million.[32]

NetObjects started to raise $50 million in a private placement with Deutsche Bank. But IBM, which controlled the NetObjects Board, did not approve the placement. In the summer of 2001, the markets plummeted with the bursting of the dot-com bubble. And ultimately IBM as the majority shareholder decided to sell NetObjects.

NetObjects Fusion, NetObjects Matrix including the MatrixBuilder, BizGoBiz and other assets were sold to Website Pros (now Web.com), a web design and services company based in Jacksonville, Florida[33]

Additionally a portfolio of seven patents was sold to Macromedia (now Adobe), the distributor of Dreamweaver, the long-term main competitor of NetObjects Fusion.

NetObjects as a division of Website Pros

Website Pros (WSP) (now Web.com) went on developing and distributing future versions of NetObjects Fusion[34] and offering subscription services based on this application, representing the mixed business model that was invented at NetObjects.

License revenue from sales of NetObjects Fusion reached nearly $3.58 million in 2006, $2.4 million in 2007,[35] and $2.5 million in 2008.[36] In May 2009 NetObjects Fusion was sold.[37]

NetObjects as a re-established company

In May 2009 NetObjects Inc. was re-established as an independent company. It acquired the NetObjects Fusion product line from Web.com. A smaller part of the amount was transferred instantly, while $3.0 million remained payable from future revenue of NetObjects Fusion sales until 2013.

Steve Raubenstine, who was vice president of the NetObjects Fusion division at Web.com (former Website Pros), serves as president and CEO of the new NetObjects Inc.

Products

Notes and References

  1. Web site: Novell Makes Equity Investment in NetObjects . Novell, Inc. / NetObjects, Inc. . 1998-10-21 . June 30, 2008 . https://web.archive.org/web/20001215152500/http://www.novell.com/news/press/pressroom/presskit/brainshare99/netobjects.html . 2000-12-15.
  2. News: NetObjects chooses Big Blue fusion . I. Satya . Sreenivas . Silicon Valley / San Jose Business Journal . 2008-03-05. May 18, 1997.
  3. Web site: IBM completes investment in NetObjects . NetObjects, Inc. . April 16, 1997 . March 5, 2008.
  4. News: IBM Archives 1997 . IBM Archives . . 2009-01-27.
  5. Web site: 1996 25 Cool Technology Companies . ClementMok.com . Clement Mok . March 5, 2008 . dead . https://web.archive.org/web/20070927032744/http://www.clementmok.com/onrecord/article.asp?ArticleID=21&d=1990 . September 27, 2007.
  6. Web site: BUILDER.COM - Web Business - The 1st annual Web Innovator Awards - Samir Arora, NetObjects Fusion . Dan . Shafer . CNET Builder.com . CNET Networks, Inc. . June 21, 2008 . https://web.archive.org/web/20010505054830/http://builder.cnet.com/webbuilding/pages/Business/Innovators97/ss03.html . 2001-05-05 . dead.
  7. Web site: Gold Industrial Design Excellence Award (IDEA) Winners 1995–1999 . Industrial Designers Society of America (IDSA) . March 5, 2008. https://web.archive.org/web/20070928095948/http://www.idsa.org/whatsnew/sections/dh/idea_winners_95-99.pdf . September 28, 2007.
  8. Web site: Gold Industrial Design Excellence Award (IDEA) Winners 1995–1999 . Industrial Designers Society of America (IDSA) . June 27, 2008 . https://web.archive.org/web/19980519051330/http://idsa.org/whatis/seewhat/idea98/winners/netobjects.htm . 1998-05-19.
  9. Web site: NetObjects Files Patent Applications for Innovative Features of NetObjects Fusion Web Site Building Application . NetObjects, Inc. . August 8, 1996 . March 5, 2008.
  10. Web site: Patent 6311196: "Method and apparatus for implementing web pages having master borders" . Google Patents . October 30, 2001 . March 5, 2008.
  11. Web site: Patent 5911145: "Hierarchical structure editor for web sites" . Google Patents . June 8, 1999 . March 5, 2008.
  12. Web site: Patent 5845299: "Draw-based editor for web pages" . Google Patents . December 1, 1998 . March 5, 2008.
  13. Web site: Patent 7246307: "Hierarchical drag and drop structure editor for web sites" . United States Patent and Trademark Office . October 2, 2007 . March 5, 2008.
  14. Web site: Bundling discussions . Samir . Arora . netobjects.fusionmx.gen-discuss . Google Groups . July 16–18, 2001 . March 5, 2008.
  15. Web site: H-P, NetObjects to unveil 3-year deal . Chris . Kraeuter . CBS.MarketWatch.com . MarketWatch, Inc. . July 27, 2001 . July 4, 2008.
  16. Web site: NetObjects Defies Prediction . Lashinsky . Adam . TheStreet.Com . March 22, 2000 . September 24, 2006 . https://web.archive.org/web/20050307091804/http://www.thestreet.com/comment/siliconstreet/904775.html . 2005-03-07.
  17. Web site: NetObjects Authoring Server Suite 3.0 . Ted . Brockwood . Web Developer's Journal . September 1, 1999 . Jupitermedia Corporation . July 23, 2008.
  18. Web site: NetObjects Authoring Server & TeamFusion Client 3.0 . Gordon . Gordon Benett . Intranet Journal . 1999 . Jupitermedia Corporation . July 23, 2008.
  19. Web site: Serena Collage . Serena Software . Serena Software, Inc. . https://web.archive.org/web/20071005162234/http://www.serena.com/products/collage/index.html . 2007-10-05 . dead.
  20. Web site: Eliminating risk is key to SME success: Interview: Samir Arora of NetObjects . Mark . Vernon . FT.com Financial Times . The Financial Times Ltd. . June 21, 2008 . https://web.archive.org/web/20011125052215/http://globalarchive.ft.com/globalarchive/article.html?id=010620001434&query=samir+arora . 2001-11-25 . dead.
  21. Web site: NetObjects' Samir Arora to Speak at Internet World Chicago . iSource Online . Vulcan Publishing, Inc. . June 26, 2008 . https://web.archive.org/web/20010729070843/http://www.isourceonline.com/article.asp?article_id=48 . 2001-07-29.
  22. News: IBM Selects NetObjects Matrix . Newcomb . Kevin . InternetNews.com . Jupitermedia Corporation . June 11, 2001 . 2008-03-05.
  23. Web site: GoBizGo . Heath H. . Herel . Reviews by PC Magazine . Ziff Davis Publishing Holdings Inc. . October 17, 2000 . August 22, 2008.
  24. News: MERANT to Acquire NetObjects Division . Newcomb . Kevin . InternetNews.com . Jupitermedia Corporation . January 12, 2001 . 2008-03-05.
  25. Web site: Merant to acquire NetObjects division . Holland . Roberta . ZDNet News - Technology News Now . ZD Inc. . June 23, 2008 . https://web.archive.org/web/20010221052100/http://home.zdnet.com/zdnn/stories/news/0,4586,2674069,00.html . 2001-02-21 . dead.
  26. Web site: NetObjects To Support Mac OS X . Newcomb . Kevin . InternetNews.com . Jupitermedia Corporation . June 12, 2001 . July 6, 2008.
  27. Web site: NetObjects climbs on IBM deal . Mike . Tarsala . CBS.MarketWatch.com . MarketWatch, Inc. . June 11, 2001 . July 6, 2008.
  28. Web site: NetObjects, Inc. announces fourth quarter and fiscal year-end 2000 results . PR Newswire Europe Ltd. . March 5, 2008.
  29. Web site: Crowded House . Tristram . Claire . ZDNet . Ziff-Davis Publishing Company . March 10, 1997 . June 28, 2008 . https://web.archive.org/web/19991007050446/http://www.zdnet.com/zdnn/content/pcwk/1410/pcwk0039.html . 1999-10-07.
  30. Web site: 'Another' Upgrade? . netobjects.fusion30.gen-discuss . Google Groups . December 9–21, 1998 . March 5, 2008.
  31. Web site: NetObjects, Inc. announces financial results for its first quarter of FY2001 . PR Newswire Europe Ltd. . March 5, 2008.
  32. Web site: Netobjects Inc · 10-Q · For 6/30/01 . Securities and Exchange Commission, Washington, D.C. . August 14, 2001 . March 5, 2008.
  33. Web site: Netobjects Inc · PRE 14C · For 9/30/01 . Securities and Exchange Commission, Washington, D.C. . October 22, 2001 . March 5, 2008.
  34. Web site: NOF-Club Interview mit Stephen M. Raubenstine . Das große Interview . NOF-Club Deutschland (NetObjects Fusion Userclub) . July 7, 2009. https://web.archive.org/web/20031128171754/http://www.nof-club.de/werner/interview/wsp/ . 2003-11-28. de.
  35. Web site: Website Pros Reports Fourth Quarter and Full-Year 2007 Financial Results . Investor Relations . Website Pros . February 12, 2008 . March 5, 2008.
  36. Web site: Web.com Reports Fourth Quarter and Full Year 2008 Financial Results . Investor Relations . Web.com . February 10, 2008 . February 23, 2009.
  37. Web site: Web.com Quarterly Report for the quarterly period ended June 30, 2009 . SEC . Web.com . August 5, 2009 . August 14, 2009.
  38. Web site: Product Updates and Downloads . live . NetObjects . https://web.archive.org/web/20210421044729/http://www.netobjects.com/html/downloads.html . 2021-04-21 . 2021-05-20 .
  39. Web site: Serena Collage to go off into the sunset . Tony . Byrne . Trendwatch Blog . CMSWorks, Inc. . March 12, 2008 . April 15, 2009.
  40. Web site: Website Pros 2007 Annual Report . dead . 2008-04-17 . Website Pros (Predecessor to Newfold Digital) . . Page 11 as printed on page (Page 21 as stored in PDF) . https://web.archive.org/web/20160303172548if_/http://files.shareholder.com/downloads/WSPI/351433097x0x189105/BED273D3-F558-48EF-9A1B-4248CFBEBEF8/Annual%20Report%20for%20Web.pdf . 2016-03-03 . 2021-05-19 .
  41. Web site: Website Pros 2007 Annual Report . dead . 2008-04-17 . Website Pros (Predecessor to Newfold Digital) . . Page 5 as printed on page (Page 15 as stored in PDF) . https://web.archive.org/web/20160303172548if_/http://files.shareholder.com/downloads/WSPI/351433097x0x189105/BED273D3-F558-48EF-9A1B-4248CFBEBEF8/Annual%20Report%20for%20Web.pdf . 2016-03-03 . 2021-05-19 .

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