Aim of agreement between Sun and America Online is to `dot.com the world'

Mergers and alliances between key players are commonplace in today's constantly changing information technology industry. Just two weeks ago, Sun Microsystems and America Online said they would ship their first jointly developed products for electronic commerce early next year.

The companies built a close relationship during AOL's acquisition of Netscape. In the deal, completed last month, Sun and AOL agreed to pay each other millions of dollars for various goods and services. The complicated agreement was reached during the Netscape-AOL merger negotiations.

In recognition of the large role Netscape software will play in product development, Sun and AOL will develop products through the newly formed Sun-Netscape Alliance. It will operate as a separate company, employing 2,000 Sun and Netscape staff members, including a sales force of 500. Both companies have headquarters five miles apart in Silicon Valley, California.

The alliance aims to "dot.com the world", said Sun executive, Mr Mark Tolliver, who was named its president and general manager.

Mr Tolliver and other senior executives made the first in a series of announcements on March 30th at a press and analyst conference at the Waldorf Astoria hotel in New York.

The alliance's offerings will include hardware, software, electronic commerce applications, client browsers and an audience. AOL's 17 million registered members are being combined with Netscape's 13 million customers.

"For communication to go to the next level, all technologies and applications have to be raised to the next bar," said Mr Barry Schuler, president of the interactive services group at AOL. "We had to bring the three companies together with their complementary skills to bring things to the next level for the next decade of e-commerce."

The product portfolio includes BuyerXpert, for procurement; SellingXpert, MerchantXpert and PublisherXpert, for merchant sales, and BillingXpert for billing services - all Netscape products. Servers for mail, messaging, calendar management, and directory and security products also will be based primarily on Netscape technologies.

Mr Ed Zander, chief operating officer of Sun Microsystems, said the Alliance had been four months in the making and had five goals. "To become the dot.com company. To establish ourselves with IBM and Microsoft as the leading players in e-commerce. To be multi-platform and multi-vendor. To make money. To get customers dot.commed."

In connecting Web browsers at the front-end with legacy systems at the back-end, he said: "Today's opportunity is to produce software products that are scalable." Scalability gives computer platforms the capability to handle more and more transactions and cope with the increasing volume of Web activity.

"Consumers are moving to the Web, businesses are taking their practices to the Web and audiences are being aggregated via portals," Mr Tolliver said.

He pointed to Citigroup as having an exemplary consumer portal strategy. Citigroup sponsors the financial channel on Netscape's Netcenter site "to be in the traffic flow," Mr Tolliver said. Asked why the alliance was formed, AOL's Mr Schuler said: "We're doing this because we can. We share a single vision. If we can't pull this off, we'll join the moron's hall of fame!"

The Sun-Netscape Alliance will do a road show, visiting 15 cities worldwide in May and June (including London on June 2nd).