Given that Microsoft's primary threat right now is from SAAS / PAAS and browser-based, OS-independent tools, I'd say Microsoft's fear of Netscape was well-founded. Its error was in thinking that it could dispatch that threat by killing off the competitor. To borrow an overused metaphor, the problem wasn't Al Qaeda, but terrorism. It wasn't the specific competitor, but the technology and development model it represented.

And much in the same way: you can't really defeat a technology. As we now see with Microsoft, very slowly, responding to the threat by providing its own offerings, despite the considerable revenue threat this creates for the company. As with other fallen tech giants, it's turning increasingly to patent revenues and other forms of extractive revenue rather than productive activities.

"But I also believed Microsoft was exaggerating his fears of Netscape."

Microsoft is still in the same position as it was pre-Netscape. It still effectively owns the OS and office software markets. It just wasn't entirely able to take over a couple of new markets.

That failure was pretty bad: MS is no longer seen as a "hot new thing", or a producer of hot new things. But in terms of doing damage to Microsoft, nothing from outside MS has done anything, as far as I can see. (Antitrust lawsuits notwithstanding.)

You got a point (I upvoted you). But Netscape is not in the same position as it was pre-Microsoft. We can't know what would have happened, had Netscape survived.