I found an article that says Sun will help distribute AOL/Netscape. If that is true, then AOL should do okay with Netscape.
AOL targets businesses with Netscape-Sun deal
By Therese Poletti
SAN FRANCISCO (Reuters) - America Online Inc., which has lured million of consumers into cyberspace, has not had much success in the corporate market, but its proposed $4.2 billion merger with Netscape could change all of that.
The deal, which includes Sun Microsystems Inc. (Nasdaq: SUNW - news) in a related alliance, could position the trio to
compete effectively in the business market now dominated by software behemoth Microsoft Corp.
AOL (NYSE: AOL - news) and Netscape Communications Corp. (Nasdaq: NSCP - news) are focused primarily on different markets, with AOL, the world's biggest online service, mainly interested in consumers. Its ever-growing customer base now stands at over 14 million subscribers.
For its part, Netscape has been struggling to compete against Microsoft (Nasdaq: MSFT - news), International Business
Machines Corp. (NYSE:IBM - news) and others for corporate customers, as it sought to find a new business beyond Internet
browsers with software for running Web sites and electronic mail.
The deal also involves a licensing and marketing pact with Sun, which has expertise in selling hardware and software to corporate customers.
Analysts said the pact with Sun would play a very big role in the merger, both in targeting corporate customers and with its Java
programming language, which is designed to run on many diverse types of computers.
Palo Alto, Calif.-based Sun, with a sales force of 12,000, sells server computers, workstations and software only to corporate
customers. With that sales force offering Netscape's corporate software products, AOL and Netscape are likely to make more
inroads into the business market, ranging from small, medium to large corporations.
''In many ways, the Sun element is the most interesting piece of this,'' said Jim Balderston, an analyst with Zona Research in
Redwood City, Calif.
''Sun can take the Netscape server products and offer the enterprise a whole series of things they could not do otherwise.
They can compete more directly with Microsoft, which will make Scott McNealy very happy,'' he said, referring to Sun's chief executive.
Executives of Dulles, Va.-based AOL said on a conference call that a big focus for the merger was electronic commerce, a
broad term that refers to the market for conducting electronic transactions and buying and selling goods over the Internet.
''People who are expert at building stores in bricks and mortar are not so expert in building Web sites,'' AOL President Bob
Pittman said on a conference call to discuss the merger.
Analysts said AOL and Netscape, together with Sun, would be able to offer the hardware, Internet server software and applications, and an Internet connection. Companies that do not want to use AOL for their Internet access can work with Sun to sign up with another Internet access provider, AOL said.
''E-commerce in a box, that is one of the potentials,'' said Balderston. ''You give a small, medium business...an e-commerce
solution and they will find that pretty attractive.''
Zona Research said the market for electronic commerce was expected to reach $31.3 billion this year, up from $10.4 billion in
1997, including business-to-business transactions. Next year, it estimates e-commerce revenues at $71.3 billion.
Another aspect of the deal may include CompuServe, the rival online service that AOL purchased last year and which could be
revived as a brand for business users. CompuServe has lost about half of its subscribers since its merger with AOL.
''This deal gives AOL more ammunition to recreate CompuServe as a separate brand,'' said Gary Arlen, president of Arlen
Communications Inc. in Bethesda, Md. ''In its branding strategy, Pittman talks about the value of having many brands.''
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