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  1. Technology
February 11, 1999


By CBR Staff Writer

By William Fellows

Sun Microsystems Inc and America Online Inc say they are developing a ‘New Browser’ which will compete with Microsoft Corp. Although AOL will continue to use Microsoft Internet Explorer as it is contracted to do, AOL says it will review the decision periodically. Sun wouldn’t say what is being used as the basis of the browser – we wonder if it’s another attempt to resurrect the HotJava front-end or whether it will use the small footprint browser Sun recently picked up from Beduin Communications. But Netscape Communications Corp told us that its new browser is the Gecko-based Communicator 5.0, which will beta in the Spring. In other words it’s not involved in the AOL/Sun development, apparently. Various reports suggest pieces of the new browser would be integrated into AOL services and targeted at small PDA devices. News of the browser and other components of the deal Sun made with AOL as part of the latter’s purchase of Netscape Communications Corp was laid out in Sun’s most recent 10-Q quarterly filing with the SEC. In addition to its $1.25bn commitment to AOL’s purchase of Netscape – the price of which has risen from $4.28bn at the time to $7bn with the rise in AOL stock – Sun is helping Netscape develop new versions of its software, including a browser tailored for AOL, as well as new Java-based software enabling AOL services to be deployed a range of new hardware devices including PDAs and kiosks. In addition to using Internet Explorer with its services it is also committed to using Sun’s Java virtual machine on Netscape’s browser and the jointly developed browser. For Sun the AOL- Netscape combination provides a powerful source of distribution in its battle to establish Java against Windows. The two are effectively going to develop and stitch together a full service e-commerce network supporting multiple clients using Netscape software tied to Sun back end servers delivered using AOL services. The disclosures, in Sun’s filing with the SEC – with further details expected in AOL’s own filing expected in a couple of weeks – are sure to have a bearing on the Department of Justice’s antitrust trial against Microsoft, a key argument in which is that Microsoft stifled competition in part by using its market power to exclude rivals from distribution channels. The presiding judge has already ruled Microsoft must be given access to documents which detail terms of the AOL-Netscape-Sun deal, however the case itself is about whether Microsoft violated terms of an earlier consent decree not its role in a future market. Microsoft, which has consistently said there’s no point in looking in the rear-view mirror in such a fast-changing industry said the Sun-AOL browser pact goes to the heart of what it’s been saying all along, namely that it does face significant competition therefor it cannot be a monopoly. Financial aspects of the deal revealed in the SEC filing show Sun has guaranteed that AOL will receive at least $975m for Sun’s sale of Netscape software. Sun says there’s no reason to suppose it won’t be able to shift this much Netscape software. It also pays AOL a one-time $275m license fee and $10m a year in co-operative marketing fees. AOL pays Sun $1m per month for technical support – it’s buying $500m of Sun hardware – as well as $5m a quarter for its license to Java and other Sun technologies.


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