AOL, Sun shed light on e-commerce plan

Executives from America Online and Sun Microsystems made the first of a string of "meet and greets" with press and analysts here Tuesday to explain just how they plan to pull off their newly christened e-commerce sales initiative. But as with most hastily assembled ventures, the presentation raised more questions than it answered.

The speakers, which included Barry Schuler, president of AOL Interactive Services; Mark Tolliver, president and general manager of the alliance; and Edward Zander, COO of Sun, outlined a blueprint for bringing companies onto the Internet to conduct business. In explaining the strategy, dubbed the "Silicon to Eyeballs Solution", the alliance team asserted it would compete head to head with Microsoft and IBM to deliver enterprise and e-commerce packages to corporate clients. Tolliver said that the "alliance-branded software" would be compatible with all computing platforms including Linux, Windows NT and various versions of Unix.

But the alliance sales force, which will number 500, won't be ready to sell software packages designed jointly by the Sun and Netscape technicians until next year. In the meantime, new versions of mail, directory and application server software packages will come from Netscape and Sun individually, giving rivals Microsoft and IBM a year's time to shore up their markets. (The alliance sales force will begin selling individual Sun and Netscape products immediately, therefore generating income as of this year, then will shift to collaborative software products when they become available in the first quarter of 2000.) The alliance also acknowledged the daunting task the sales force has in illuminating consumers about a cumbersome brand that combines parts of what were, until recently, three distinct companies: Sun, Netscape and AOL. To that end, Tolliver announced that this May members of the alliance team will be plugging the new product in a city-by-city tour dubbed "The .com Roadshow". The group will hit 50 cities by mid-2000 to educate people about the alliance and the products it carries, Schuler said.

Among the key product offerings plugged Tuesday is Custom Netcenter, a customisable business-to-business portal. A client can fashion its site to look much like the Netcenter portal, replete with industry-specific news feeds, plus an area for buyers and sellers to conduct transactions.

The alliance team was built out of a three-year deal struck in November when AOL announced its purchase of Netscape, a deal now valued at $US10 billion. The alliance members insist they will have operational autonomy from Sun and AOL but will report to a common board. In the deal, AOL and Sun share intellectual properties and source codes developed during the life of the alliance. Both companies will provide an equal number of the 2000 sales and technical staffers.

For AOL, the alliance marks the consumer giant's largest push into the business-to-business arena. AOL is trying to tap an e-commerce market with great potential rather than relying primarily on advertising revenue. Still, Schuler acknowledged that some of AOL's retail partners are sorely lacking the commerce infrastructure needed to ensure round-the-clock transactions. Schuler said that AOL members conducted $1.2 billion in retail business on the service in 1998, adding that heavy Christmas sales actually forced some of AOL's vendor partners to shut down from time to time to avoid crippling their servers. "We literally brought merchants to their knees. Their back ends broke. . . . Merchants have to be open 24-by-7-by-365," Schuler said, adding that the alliance's goal is to sell such merchants the e-commerce tools to handle a higher volume of sales transactions.

Sun gets access to an AOL sales force that last year struck more than $400 million in ad deals with a variety of Fortune 500 companies. Plus, AOL has a lock on the consumer market with nearly 19 million subscribers (including more than two million from CompuServe).

The news was an obvious boon for AOL, which saw its stock price rise by more than 10 per cent on Tuesday. By midday, shares of AOL were trading above $145, a new high. Sun's stock, meanwhile, remained virtually unchanged at $124.13 as of 11:30am.

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