Press Release from Netscape Communications Corp:

MOUNTAIN VIEW, Calif. (January 22, 1998 ) — Netscape Communications Corporation (NASDAQ: NSCP) today announced bold plans to make the source code for the next generation of its highly popular Netscape Communicator client software available for free licensing on the Internet. The company plans to post the source code beginning with the first Netscape Communicator 5.0 developer release, expected by the end of the first quarter of 1998. This aggressive move will enable Netscape to harness the creative power of thousands of programmers on the Internet by incorporating their best enhancements into future versions of Netscape’s software. This strategy is designed to accelerate development and free distribution by Netscape of future high-quality versions of Netscape Communicator to business customers and individuals, further seeding the market for Netscape’s enterprise solutions and Netcenter business.

This was during a time when Netscape was the browser of choice, especially within the educational segment.  However that would start coming to an end thanks to Microsoft (and later AOL):

Netscape was still the dominant web browser: 65 million users and 90% market share in the educational segment according to Netscape’s own accounts. But Microsoft’s Internet Explorer was grabbing share at a furious pace thanks to it being free (at a time Netscape was about$30) and specially the fact that it came bundled with Windows 95 and upcoming Windows 98 (released on June 1998).

Keep in mind the name ‘Mozilla’ at that time was nothing more than the name of Netscape’s user agent, the name a browser uses to contact the web server. Later on Mozilla would become the name of this open source project.  See History of Firefox & Mozilla (PDF – 4.93 MB) for a very rich and detailed time line. Ten years later IE now dominates the market, but has been losing ground to Firefox, SeaMonkey (Mozilla) and Opera.  Netscape thanks to AOL is for intents and purposes a dying (if not already dead) browser. But in the end, this bold move lead up to the creation of the Mozilla Suite now SeaMonkey and Phoenix now Firefox.

New Sources: Mozilla Links & Mitchell’s Blog