Boost for AOL, Java seen in Netscape deal

Gaining Netscape Communications' Web portal, browser and server software could help cement America Online's position on the World Wide Web and boost Sun Microsystems's Java programming language, analysts said yesterday.

Netscape has confirmed it is in talks with AOL regarding a merger but no further details were announced. However, multiple television and print press reports over the weekend valued the proposed deal at $US4 billion and maintained that AOL proposed to buy Netscape's Netcenter Web portal and Navigator browser and that Sun was eyeing Netscape's server software.

Netcenter and Navigator could give AOL the kick it has been seeking into the Web, analysts said today. With 14 million subscribers, AOL is a solid player as an Internet service provider and content provider through its "chat" and other features, but the company has yet to tap Internet visitors who do not use AOL, analysts said.

There is probably little overlap between AOL users and Netcenter users, so an AOL purchase of Netcenter would give AOL visibility to new users, according to Melissa Bane, program manager at The Yankee Group. The purchase would also let AOL add electronic-commerce revenues and more advertising revenue to the money it earns as an online-access provider, she said.

"AOL until now has really been the powerhouse of Internet service but adding Netcenter would really give them the strong push they need to the Web," Bane said. "They would gain all of those eyeballs."

The deal would extend the reach of Sun's Java, which Netscape's software uses extensively, since AOL developers would undoubtedly start using Java more, or at least as much as they currently use Microsoft's ActiveX, according to Andrew Bartels, a research analyst with Giga Information Group. "It creates a potential sandbox for Java applets to be deployed that encompasses a potential 13 or 14 million universe of customers," Bartels said. Java still needs to address its security and performance issues, but the reported deal could be a big boost for the programming language, he said.

One analyst said he doubted that AOL would agree to a deal in which Netscape's server software went to anyone but AOL itself. The server software would assist AOL in its Web push, and Netscape's Navigator browser alone would not be compelling, according to Tim Sloane, an analyst with The Aberdeen Group.

"It's got to go beyond the browser," Sloane said.

If Sun does purchase or license Netscape's server software, it could be good news for Netscape users, according to Bartels. Netscape users running Netscape on Sun's Solaris servers would gain from having a single source for both hardware and software, Bartels said. However, if the deal transpires, Netscape users running other platforms ought to question whether Sun will continue to support them, he said.

"Our understanding is that the majority of those who have Netscape servers are running them on Solaris, so this is a minority problem," Bartels said.

AOL users could also gain relief from poor-quality connections which have plagued some of them, according to Michael Goulde of the Patricia Seybold Group in Boston. Navigator could be optimised for use by AOL users and Sun could contribute its competency in Internet technologies, he said.

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More about Aberdeen GroupAmerica OnlineAOLGiga Information GroupMicrosoftSeyboldSun MicrosystemsYankee Group

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