AOL, Sun Form Enterprise Software Unit

America Online Inc. and Sun Microsystems today created a new unit that will develop and market enterprise software drawing on the product lines of Sun and Netscape. AOL acquired Netscape last week for $10 billion as part of a three-way deal that calls for Sun to market Netscape enterprise software for three years.

Sun executive Mark Tolliver was appointed general manger of the unit, which will include several hundred Netscape technical staff, in addition to people from Sun. The unit will also include a merged sales force headed by former Netscape chief operating officer Barry Ariko.

John Paul, a Netscape senior VP previously responsible for infrastructure products such as its application and directory servers, says the "vast majority" of Netscape technical staff working on those products will be transferred to the new hybrid unit within Sun. Paul will move to a new position in charge of building internal E-commerce infrastructure across AOL's online properties, as well as its units such as CompuServe and Netscape Netcenter.

Sun and Netscape have not given enterprise users a clear road map of where their respective products are going, but Paul says they will do that sometime next week. "We have competing products," he says. "What the product teams are looking at is how to move customers forward with a product strategy that makes sense."

AOL also said today that it will cut 350 to 500 Netscape employees, or up to 20% of the total at Mountain View, Calif., offices. AOL will also cut 350 to 500 of its own workers. The parent company did not specify where the cuts will be made, but a majority are expected to be in overlapping areas, such as sales and back-office operations such as accounting.