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AOL And Sun To Divvy Up Netscape?
[3:27 AM] In a stunning development this weekend, reports are surfacing that says that AOL will buy Netscape in a deal estimated to be worth US$4 Billion. The deal would reportedly be a stock only transaction. Sun Microsystems will also be involved.

AOL would retain Netscape's NetCenter web portal and the Navigator and Communicator products. Sun Microsystems's would take over Netscape's business software efforts such as the various Netscape web servers. The involved companies have reportedly been in serious talks all weekend discussing the buyout.

AOL currently has a special arrangement with Microsoft to use Internet Explorer as the both the internal browser engine as well as the default browser to be used within AOL. That contract expires on January 1, 1999. It is this agreement with Microsoft that has been one of the focal points of the ongoing antitrust trial being waged on Microsoft by the Department of Justice. AOL had announced an agreement with Netscape to use Navigator within AOL, but the agreement was not exclusive. Almost immediately after announcing the Netscape deal, AOL made a surprise announcement that it had also chosen Internet Explorer, but this time IE would be the default browser. In communications between AOL and Netscape, AOL said that Netscape's technology was superior to that of Microsoft, but that Microsoft was giving AOL equal billing on the Window's desktop.

AOL is rumored to be more interested in NetCenter than any other aspect of Netscape. NetCenter may in fact be more profitable than the other areas of Netscape's product line right now, and bringing people online in a controlled environment is that AOL is all about. There are currently no indications as to the time frame of such a deal.

The Mac Observer Spin: This development is the single largest event in the technology industry besides Apple's return to profitability. In fact, it may be looked back upon in the future as a pivotal moment in the industry. Since AOL's original agreement with both Netscape and Microsoft was first inked, AOL has become the undisputed king of online services. They are in less of a position to need the exposure gained on the Windows desktop, which may become less valuable anyway should the DOJ have its way.

At the same time, Sun could gain significant new technologies from the deal to allow it to more directly bang heads with Microsoft in both the Intranet, Internet, and other server markets. Sun has done very well in these markets, but has lost some ground to Microsoft in recent years. Netscape's portfolio would mostly compliment Sun's offerings and in many instances would bring the company into new territory. Netscape has server products for Windows NT for instance.

The disturbing thing to us is the AOL factor. AOL has never proven itself to be a technology leader. Its focus has been offering online services through proprietary technologies, not developing cutting-edge browsing technologies that allow millions of people to view and display web pages. It was their complete ineptitude in making a browser in the first place that led to both the Netscape and AOL deals in the first place! AOL could very well turn Communicator/Navigator into nothing more than an AOL lite designed to funnel people to one place and one place only. AOL has also been noticeably short on its support for the Mac in recent years. Should AOL decide that it cares more about NetCenter than providing a free browser to 17 different operating systems, we could actually find ourselves in the place where Microsoft has been striving so hard to take us, a world with only Internet Explorer.

On the other hand, it could give another company like Opera Software, the maker of the Opera web browser, the chance to rise to the fore. The Amiga may really make it big this time too.