Users Hail Sun Role In AOL-Netscape Deal



Netscape's life as an independent company came to asurprising and sudden end yesterday with its $4.2 billion acquisition by America Online. But Netscape's new life under AOL ownership may well solidify its shaky status as a provider of enterprise software, thanks to the third player in the historic deal: Sun Microsystems.

As a well-established enterprise player with a large installed hardware base, Sun will give Netscape much-needed muscle in corporate sales, support, and professional services. Although AOL will own Netscape, Sun will be Netscape's development and marketing partner for all of its enterprise applications, including servers and electronic- commerce applications.

"This [deal] certainly removes a lot of the cloud around Netscape and the issues surrounding it," says Sun president Ed Zander, referring to service and support concerns. Presumably to sweeten the deal for Sun, AOL guaranteed that it will purchase Sun systems and services--worth $500 million at list price--through 2002 for AOL's electronic- commerce partners and its own use. AOL will receive more than $350 million in licensing, marketing, and advertising fees from Sun.

Netscape customers generally hailed the Sun partnership-- with some caveats. "Netscape's developers are some of the best people in the business," says Ed Glassman, director of technology strategy at Pfizer Inc., which uses Netscape's Enterprise Web Server and Proxy Server as well as Sun hardware. "But Netscape doesn't always have the best process for managing and enhancing their products and getting feedback from enterprise users. Sun does. If they can keep the development team intact, it's a real winning combination."

That may be difficult, however. Netscape co-founder and chief technology officer Marc Andreessen's role will be determined sometime before the deal closes in the early spring, AOL executives say. And Netscape CEO Jim Barksdale will give up any operational role, keeping only a seat on AOL's board of directors. Netscape will remain in Mountain View, Calif., but will be overseen by AOL president Robert Pittman, who will continue to be based at AOL headquarters in Dulles, Va.

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