According to the Netscape blog, Netscape browser development is done.
One of the primary reasons that Firefox exists is because a few Netscape employees working on the Mozilla project realized back in 2001 and 2002 that Netscape was incapable of, or more precisely, unwilling to, make a really great browser. The reason was pretty simple -- their motivation.
Netscape's only real revenue back then was from advertising at their web properties (netscape.com, Netscape webmail, etc.) and the big reason they were allowed by AOL to continue building a browser was to drive traffic to those web properties. As a matter of fact, the team making the browser at Netscape reported into the AOL-TW group that owned those web properties.
Here's a perfect example of how we knew Netscape just wasn't going to be able to make a great browser. Back when Mozilla was getting ready to ship Mozilla 1.0, the basis for Netscape 7, the Netscape browser team was required to remove the pop-up blocking feature that those same Netscape engineers had developed in Mozilla. The reason? Obviously because AOL and Netscape web properties generated lots of advertising revenue from pop-up advertising and they couldn't very well ship a product that closed off that revenue stream.
Well, as you can imagine, Mozilla 1.0 shipped with a pop-up blocker and Netscape 7.0 shipped without a pop-up blocker and the tech press destroyed Netscape because it was so transparent what had happened.
In a desperate attempt to counter the negative press, Netscape whipped up a super-fast follow-up version, Netscape 7.0.1. This new version included Mozilla's pop-up blocker -- but here's the funny (sad) part, they disabled it for AOL/TimeWarner/Netscape web sites.
But here's the real kicker. You're gonna love this one. Netscape goes on a bit PR push, "Get the new Netscape 7, Now With Pop-up Blocking!!" Users download and install the all new Netscape7, Now With Pop-up Blocking!! and on first launch it loads up the Netscape.com homepage, which, get ready for it, yep, you guessed correctly, launched pop-ups.
That was 2002, the year that Blake, Dave, Ben, and I started the project that would eventually become Firefox.
And it wasn't just the pop-up blocker. In desperate attempts to stay viable to AOL, Netscape began selling off real-estate in the browser chrome. Default Boookmarks were sold. Sidebars were sold. "Personal Toolbar" space was auctioned off to the extent that a default install of Netscape 7 offered no space for any user ("personal") bookmarks at all. Hell, they even sold a primary navigation button -- "print plus", a menu that hung off of the Print button that did nothing but send users to buy printer supplies. Toss in a big pile desktop shortcuts for every AOL product under the sun that came default with every Netscape install and you start to get a pretty clear picture.
They drained every penny they could out of the browser until finally giving up in 2003 and closing down browser development at Netscape. Future versions were outsourced efforts built on Mozilla and Microsoft technologies and offering pretty awful user experiences and even further tie-ins to AOL and AOL partner services. Combine that with Netscape and AOL web services tanking and you've got a pretty clear death spiral.
I couldn't end this rant without saying that I'm hugely thankful to a lot of amazing people from Netscape who made Mozilla happen back in 1997-8 and to all of the great engineers and other talent at Netscape that built much the platform we depend on today. Those people deserve a lot of credit for Mozilla's and Firefox's successes today.
Having said that, I'm glad that sad beast has finally been put down.
update: TechCrunch has more, though I don't buy that Tom Drapeau comment about no room for a browser in AOL's new ad-supported world. Hell, that's the only reason they've kept a browser around as long as they have -- because it was useful in driving traffic to their ad-supported world. The real truth is probably closer to "we weren't building a compelling enough product to be able use it to bring users to our ad-supported world and it doesn't make sense spending more on browser development than we recoup in increased ad revenue as a result of that browser work."
update2: yeah, I know they brought the browser back in-house but that clearly didn't come with increased commitment to making it a viable product.
update3: Ryan Naraine's got another reason to celebrate this news: security.
update4: A couple people have asked so I'll answer here. I was an AOL Netscape employee from 2000-2003. Before that I was a Mozilla volunteer for a year or so.