DATE: 980320

EDITION: FINAL

SECTION: Business

PAGE: F4

BYLINE: Jared Sandberg, with files from Don Clark

ILLUS: Black & White Photo: The Associated Press / Microsoft Chairman Bill

Gates has called Apache `our biggest competitor.'

ST: News

SOURCE: The Wall Street Journal

IT: P

David takes on web Goliaths, for free: Server software that was cobbled

together used more than Microsoft's and Netscape's

The epic struggle between Netscape and Microsoft over software for the World

Wide Web is a well-chronicled David vs. Goliath tale. But both companies are

losing business to a rival product few people have ever heard of: Apache.

Among Apache's best features is one that is particularly hard to resist: It

is entirely free.

Apache, it turns out, doesn't come from a company at all. It's the loving

labour of a loose confederation of programmers who, working in their spare

time over gin and tonics at home and collaborating on the Internet, wanted

to build a better way to serve up web pages to the millions of people who

want to see them. Once they had completed this server software three years

ago, they triumphantly released all of the technical details on the

Internet, letting any web site use it gratis.

``Direct remuneration itself wasn't an interest,'' says Brian Behlendorf,

one of the chief organizers of the Apache Project -- so named because the

team started with university-lab software and ``patched'' it with new

features and fixes. (``A patchy server'' -- get it?)

``We needed a better server for our own purposes, and we wanted to take our

future into our own hands,'' says Mr. Behlendorf, who makes his living as

chief technology officer at web developer Organic Inc.

Now Apache server software is used by an impressive range of companies and

organizations to run their web sites, including Kimberly-Clark Corp.,

McDonald's Corp. and Texas Instruments Inc., as well as the New York Yankees

and the Atlanta Braves.

By some estimates, Apache is in place at close to half of the two million

web sites on the Internet, more than double the share held by Microsoft

Corp. or Netscape Communications Corp.

That is especially galling to the two software juggernauts. ``Apache is our

biggest competitor,'' Microsoft Chairman Bill Gates declared at a Wall

Street gathering more than a year ago.

Microsoft and Netscape have spent hundreds of millions trying to build a

profitable Internet business. They hand out millions of free copies of their

browser software to help consumers navigate the web, hoping this will lead

to increased sales of the server software they sell to corporate customers.

Apache's popularity is emblematic of the strange economics underpinning the

entire Internet industry. Five years after the Internet began to shift from

an obscure academic network to a teeming commercial enterprise, lots of free

stuff still is widely available, from ``freeware'' programs to slick web

'zines to news and stock quotes.

``It's the essence of the Internet,'' says Esther Dyson, founder of

high-tech publisher EDventure Holdings Inc. ``There's an ethos to contribute

to a work that's greater than any of us,'' she says.

Randy Terbush, one of the original Apache developers and the founder of

Covalent Technologies Inc., says Apache ``is testimony to what a user-driven

software project can accomplish, and why that may be a better model than

commercially driven efforts.''

But that ethos is giving Internet companies a run for their money.

``The genie's out of the bottle,'' says Eli Noam, director of Columbia

University's Institute for TeleInformation. ``There are too many people who

will continue to offer free software that will continue to put pressure on

traditional software companies.''

The Apache project began informally in early 1995, when a handful of web

developers were searching for robust and flexible software that could

deliver web pages to users' desktops quickly and reliably. Microsoft hadn't

yet created a server program. Netscape had an early version that lacked

sophisticated features the Apache contigent wanted.

So Mr. Behlendorf and a few colleagues started zapping e-mail to and fro

about how to create new features and work through problems. An original

circle of eight programmers began working on some existing software code

from a program written at a university lab, communicating via an Internet

mailing list that updated everyone on each designer's progress.

The list grew to 150 people, and 200 more contributors have pitched in, many

of whom have never met face to face. The first version of Apache was ready

in April 1995, and by year end it had become the No. 1 web server program.

Today Apache is said to have a 47 per cent share of the Internet server

market compared with 22 per cent for Microsoft and about 10 per cent for

Netscape, according to Netcraft Ltd., a British consulting firm. Other

sources reject those figures for several reasons, including that among the

private internal ``intranets'' that companies install, Microsoft and

particularly Netscape hold the lead. Still, even Microsoft's newly acquired

subsidiaries -- Hotmail Corp. and WebTV Networks Inc. -- use Apache software

on their web sites.

The market is strategically important to both of Apache's for-profit rivals.

Microsoft offers its web server software as part of its crucial Windows NT

operating system, which costs $725 or more. Netscape's web servers start at

$1,295 for 50 seats. The total web server market generated more than $400

million in revenue in 1997, according to International Data Corp.

One reason Apache came into its own is that the source code, the basic

software coding that most developers keep secret, is readily available on

the Internet. That allows users to make improvements and eliminate any bugs

that emerge.

``If you give everyone source code, everyone becomes your engineer,'' says

John Gage, chief scientist at Sun Microsystems Inc., which built its own

operating system on the early Unix version developed by the Berkeley System

Distribution effort.

But many corporations balk at public-domain software. ``When I get calls in

the middle of the night, I want to know I can call someone, get an answer,

and go back to sleep,'' says Mark Kortekaas, director of technical

operations at Sony Corp.'s Online Ventures Inc. unit in New York.

Both Microsoft and Netscape are banking on such concerns. ``Enterprise

customers don't want to grow their own,'' says John Paul, senior

vice-president at Netscape. Microsoft's answer to Apache is to ``build a

better product,'' says Mike Nash, director of marketing for the Redmond,

Washington, company's server group.