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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: slurper who wrote (12697)	4/25/1999 7:58:00 PM
From: Srini	Respond to of 41369

Slurper: <<Did anyone read IBD Monday edition (comes out Saturday). It looks like IBM and AOL will possibly be joining forces. That should clearly subdue any concerns regarding competition>> The same article suggests that such moves may place AOL directly in the crosshairs of MSFT....not a great place to be IMO. Could IBM Be Trump Card In AOL-Microsoft Dispute? Date: 4/26/99 Author: Doug Tsuruoka America Online Inc. and Microsoft Corp. are viewed as two gorillas waiting to seize dominance of the Web-browser jungle from one another. But what if another ape suddenly stomped in and sided with one of the two? That third simian might be IBM Corp., analysts say. Big Blue, so the argument goes, could give either AOL or Microsoft a powerful ally in supplying new Internet-oriented technologies and services if a browser war erupted. ''IBM is the wild card that can really swing the balance of power,'' said James Preissler, analyst at PaineWebber Inc. in New York. Given IBM's growing interest in Web- based areas such as electronic commerce, AOL has a better chance of winning over IBM, some analysts say. AOL's huge presence on the Internet gives the company a leg up on Microsoft. IBM also could ally with Microsoft, but past collaborations between the two on software resulted in friction. AOL and Microsoft, at this stage, have interests that are too diverse to merit war, Preissler says. AOL is an online service provider, not a software leader like Microsoft. Both would find it hard to fight each other unless a company such as IBM put its resources into the struggle and upped the ante. AOL and Microsoft both declined comment on a possible IBM alliance. Karl Salnoske, an IBM general manager in electronic commerce, also refused to discuss the company's future business alliances. Still, IBM doesn't rule out forging partnerships with other players, Salnoske says. ''We are always very open to working with other companies that can basically help fill in the gaps around our products and the services we're offering,'' Salnoske said. ''We're very much open to partnering where it makes sense.'' Theories about battle lines and allies in a potential AOL-Microsoft brawl are circulating on Wall Street as the two companies remain mum on future plans. AOL, the world's biggest online service, has fueled speculation about a pending battle with Microsoft by disclosing little about its plans for Netscape Communications Corp. during a recent reorganization. AOL bought Netscape for $4.2 billion in November. Many analysts say Microsoft has been on a collision course with AOL since the online firm bought Netscape. Netscape's browser is the main rival to Microsoft's Internet Explorer. And AOL's Web portal - a sort of Internet on-ramp - competes with Microsoft's MSN site. AOL was expected to make a move against Microsoft this spring by dropping Internet Explorer from its online service, thus benefiting Netscape browsers. But AOL chose instead to retain Internet Explorer until 2001. Some analysts contend AOL will drop Internet Explorer for a new Netscape browser due later this year. AOL may go further and come out with an operating system to compete against Microsoft's Windows. Going into operating systems could be hard for AOL, though, since it has no experience in the field. Microsoft's been changing the rules of engagement against AOL, says Barry Parr, analyst for International Data Corp. in Framingham, Mass. One big move came when Microsoft turned its free electronic-mail service, HotMail, and its Internet Explorer browser into a communications platform that competes against AOL services, he says. Microsoft is comfortable doing this since it has software expertise, Parr says. That puts AOL on the defensive. It must integrate Netscape into its company while keeping its browser competitive. AOL also is fighting against other Web access firms that still use Internet Explorer, he says. This is why some analysts think the situation is ripe for a third party to enter the fray. The question is, Which side would IBM take? IBM might give AOL the resources it needs to attack Microsoft on operating systems. IBM, the world's biggest computer maker, has moved into software and electronic commerce. It's still possible that IBM could team up with Microsoft. Other giants such as Intel Corp. could jump into the game and team up with AOL, thus putting Microsoft and Big Blue together. An IBM-Microsoft alliance would link the world's two most powerful software companies and give Microsoft access to IBM's resources in hardware and consulting. Big Blue, which had sales of $81.7 billion in 1998, also is involved in some of the same areas as AOL and Microsoft. These include Internet-oriented products such as electronic-messaging tools and software built around Java, a business language developed by AOL partner Sun. IBM is also a powerful innovator. Last year it won 2,682 U.S. patents - more than any other company. Still, some analysts are skeptical about IBM butting into an AOL-Microsoft browser war. ''It doesn't make any sense to speculate,'' said Abhishek Gami, analyst with William Blair & Co. in Chicago. ''Anything can happen, and imagination is boundless.'' (C) Copyright 1999 Investors Business Daily, Inc. Metadata: AOL M Srini.