What the AOL/Netscape deal means to you
November 30, 1998
by Tom Spring
(IDG) -- With Netscape in America Online's back pocket and Sun Microsystems along for the ride, the world's largest online service will be quite a different beast.
By acquiring Netscape, AOL not only becomes one of the biggest brand names on the Web, it also becomes one of the richest property owners. Its new market strength threatens Microsoft and transforms AOL into the tech sector's newest 800-pound gorilla.
For Microsoft, it's clear that the Netscape deal means one thing: competition. What's not so clear is what an AOL, Netscape, and Sun trio will mean for average Web surfers.
King of eyeballs
When AOL gobbles up Netscape's Netcenter, it will have unprecedented ownership of Web access points, known as portals. With AOL.com and Netcenter, AOL will own two of the four most popular sites on the Web.
Add AOL's 14 million users to Netcenter's 20 million visitors a month, and 58 percent of surfers will visit an AOL-owned site monthly, according to market researchers International Data Corporation. This will put AOL way ahead of the Web's current portal powerhouse Yahoo.
By controlling Netcenter, AOL will expand beyond its base of home users and reach Netcenter's mostly business users.
If you thought AOL's trial membership CDs were obnoxiously ubiquitous, prepare yourself for AOL everywhere.
With its new marketing might, not only will AOL court Netcenter users with AOL services, but the browser itself could represent new ad space.
AOL could easily integrate commerce and content features into future versions of the Netscape browser, said Melissa Bane, Internet expert at the Yankee Group.
The Netscape browser will stay much the same, said Netscape President and CEO James Barksdale, who will sit on AOL's board if the deal passes regulatory muster.
AOL as technology leader
AOL's image as technologically behind the times will come to an end. Along with the Netscape browser, AOL will now have a cadre of top-notch programmers at its disposal. These Netscape programmers, who helped develop many cutting-edge technologies, will likely give AOL a technical boost.
Part of AOL's purchase of Netscape will include acquiring the technology controlling thousands of Web sites on the Internet: Netscape is a major developer of the server software that processes electronic-commerce transactions on Web sites.
Once AOL controls this software, its technology will become ubiquitous. AOL technology will be fused into vast numbers of online shops, online ads, and electronic cash registers.
In the battle for Web access through TVs, AOL boosts its clout substantially with the ownership of Netscape and a partnership with Sun Microsystems. AOL has talked about launching an AOL TV product similar to Microsoft's WebTV.
But AOL technology will likely go beyond TVs. In today's announcement of the deal, Sun CEO Scott McNealy said that part of his company's pact with AOL is the development of a host of new Internet devices.
Despite assertions by AOL that it plans to keep Microsoft's Internet Explorer as the default browser for its flagship AOL network, analysts believe AOL will soon replace it with Netscape's Navigator.
AOL's announcement Tuesday that it will keep the Microsoft browser is strategic posturing to keep antitrust lawyers pounding away at Microsoft, said Jill Frankle, an analyst with International Data Corporation.
If Navigator does replace Internet Explorer on the AOL service, Netscape's browser will regain the throne as the most popular tool for cruising the Web.
AOL could be tempted to use the Netscape browser as a tool to coax its 14 million members to become more familiar with the Web, and go beyond AOL's proprietary network. Earlier this year, AOL began letting members check and read e-mail through its Web site, without having to log on to AOL.
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