AOL, Sun Micro Developing Online-Commerce Software
New York, March 30 (Bloomberg) -- America Online Inc., the world's largest online service, and Sun Microsystems Inc. said they'll develop software that lets companies sell products on the Internet, tapping the growing market for electronic commerce.
The companies unveiled an alliance in November and are working together to sell software made by Netscape Communications Corp., which AOL bought this month for $10.2 billion. Products will include e-mail and secure messaging, billing and other Web- based software that will be sold by a 500-person sales force.
The alliance hopes to speed the development of electronic- commerce software and services, targeting the mushrooming number of companies doing business on the Internet. Sun, one of the biggest makers of computers that power Internet sites, and AOL hope that together they can compete more effectively against Microsoft Corp. and International Business Machines Corp. ''They will have a soup-to-nuts way for companies to dot-com their business,'' said Kimball Brown, an analyst at market researcher Dataquest in San Jose, California.
Investors cheered the agreement. AOL shares rose 11 7/8 to a record 144 1/4, benefiting from the Sun agreement and PaineWebber Inc. analyst James Preissler's forecast that AOL will rise to 215 in 12 months, up from an earlier target of 125. Sun rose 1 7/16 to a record 125 15/16.
Sun-Netscape
The venture, called simply Sun-Netscape Alliance, will have about 2,000 employees, all of them working at either Sun or AOL. Most will be in and around Palo Alto, California, where Sun is based, or in Mountain View, California, where Netscape is based.
The two companies will share costs and sales according to terms that weren't disclosed. In an earlier regulatory filing, Sun disclosed that it agreed to pay AOL about $1.28 billion during three years for the right to sell the Netscape products.
Sun and AOL expect to ship the first jointly developed products in the first quarter of 2000. Until then, they'll sell existing Sun and Netscape products. The companies said they expect the alliance to be profitable immediately as a result.
Sun and AOL want to give companies the tools they need to make shopping on the Internet easier. AOL expects consumers to buy $37.5 billion of goods and services on the global computer network by 2010 and hope to get a piece of that revenue by delivering its audience of 17 million to merchants.
For online commerce to blossom, companies need better systems for handling orders and presenting products on the Web, said Barry Schuler, AOL's president of interactive services. ''It's still too difficult'' to buy goods on the Internet, Schuler said. Without innovation, growth will stop, he said at a press conference about the alliance in New York.
Internet Sales
Sun, meanwhile, is trying to become a one-stop shop for companies doing business on the Internet. In newspaper and television ads, the company claims to be the dot in ''.com.'' Netscape's business software will bolster that claim, analysts said. Sun already sells the powerful computers and much of the software that runs the world's Internet sites.
As a pair, AOL and Sun present a more formidable threat to Microsoft and IBM in electronic commerce. With Netscape software, the alliance has products that span from silicon chips that power computers to popular World Wide Web chat rooms.
Last week, AOL and Sun named Sun executive Mark Tolliver as president and general manager of the alliance. He was president of Sun's consumer embedded division. The companies named Barry Ariko, formerly Netscape's chief operating officer, as executive vice president and deputy general manager of the alliance. |
