Rumours that Netscape Communications' Australian operation is on the verge of closure have strengthened, with the news that Netscape's office in Hong Kong has abruptly and quietly closed down.
All that Netscape in Australia revealed by press time was that a change of business model will affect the way it sells products and services in Australia and in various territories around the world.
According to a statement issued yesterday, details of the company's new local structure are unavailable, although Netscape has said that its Worldwide Professional Services division will remain in Australia.
Meanwhile, Catherine Xu, Netscape's director of marketing for Asia/Pacific based in California, confirmed that Netscape's entire sales force operating out of the Hong Kong office, including North Asia general manager Savio Chow, has been laid off.
An unspecified number of technical and professional services personnel will continue to operate out of Hong Kong, according to Xu.
Xu, who was reached at the company's Mountain View, California, headquarters earlier this week, explained that Netscape is revamping its channel strategy in certain markets around the world in order to grow the business and increase profitability.
"The Hong Kong office closed down, and the reason for the restructuring for Asia/Pacific is really trying to see which sales model is functioning well right now and how we can cut costs," Xu said. "Because our company strategy going forward is looking to increase our profit margins, cutting down costs is just as important as increasing revenue."
Netscape's offices in Japan and Singapore will remain in place, and the Singapore office will continue to serve as the headquarters of Netscape's South Asia operations. That South Asia continues to warrant a direct presence while North Asia does not has to do with differences in the customer bases in the two markets, Xu explained. "In South Asia they have more of a kind of customer called a VAN -- value-added network [provider]. So it's mainly on what product is selling well in which region and what's the best way to support it."
While Netscape's Asia/Pacific headquarters in Mountain View is directly involved with South Asia deals as well, "those deals tend to involve partnerships with large systems integrators who need some kind of direct touch", Xu said.
Although Netscape in 1996 had stated its intention to open offices in Beijing, Shanghai and Guangzhou by the first quarter of 1997, those offices were never opened, and Xu said the company is still taking a wait-and see approach. "We want for a while to manage North Asia sales from [the Mountain View] headquarters and support those channels from here," she said.
"In the future, if we see a strong need for local sales offices that can be much more cost-effective than the one we had in Hong Kong, then we may consider it. But at this point we want to do the current setup for a while and see where is the best place to set up."
Netscape's original plan to move its Asia/Pacific headquarters from Mountain View to a city in Asia by the end of 1997 failed to pan out as well. Netscape has been "constantly looking" at the issue and has concluded that leveraging US expertise and facilitating the quick flow of information can best be accomplished by maintaining the Asia/Pacific headquarters in California, Xu said.