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November 24, 1998

SUN LIKELY TO CONSOLIDATE SOME SERVERS WITH NETSCAPE

By CBR Staff Writer

In addition to the guarantee of $500m in equipment and services revenues Sun Microsystems Inc will get for its part in the America Online Inc-Netscape Communications Corp deal, Sun gets itself a ready-made suite of e-commerce, messaging and middleware technology developed by Netscape running on its Solaris operating system. Sun and Netscape have signed a three-year joint engineering and marketing agreement whereby Sun will initially include the Netscape servers on its own price list and will also jointly develop both client and server software. On the client side, this will include Netscape Communicator, Sun’s HotJava, and its recently-acquired Beduin Communications Inc technology, which includes a mobile-phone browser. Aside from the desktop environment, the idea, says John McFarlane, president of Sun’s Solaris software unit, is for Sun and AOL-Netscape to develop thin versions of the AOL service for small footprint consumer devices, such as pagers and phones using the PersonalJava platform as a base. However, he was at pains to point out that despite working with AOL, Sun is free under the terms of the agreement to work with any other ISP it chooses. On the server side, things are a little bit more complicated. By agreeing to sell and market Netscape’s entire server software range, Sun will tread on some of its own toes. For instance, both companies have web, enterprise messaging and application servers, the last of those having come from acquisitions – Netscape’s Kiva and Sun’s NetDynamics. McFarlane says that that despite some similar products, some of the underlying technology is complementary. However, at the moment, with the acquisition not likely to close for another four or five months, it is too early to say whether or not there will eventually be one set of Solaris e-commerce and web servers from Sun and AOL-Netscape. Steve Savignano, Netscape’s senior VP of e-commerce products, said that in terms of Netscape’s commerce applications, including its ECXpert, BillerXpert, 98% of the installed base runs on Solaris. He said that in terms of its enterprise server products, Solaris is the predominant platform. Sun recently dirtied its hands – as it would see it – with Windows NT when it bought NetDynamics, but Savignano says Netscape is likely to do much of the NT development work for the foreseeable future. Whereas Netscape said it sells to both ISPs and what it calls enterprise service providers (ESPs), such as its customers Citibank and Lucent, Sun emphasized the ISP market as the target for the software. Perhaps it doesn’t want Netscape invading the rest of its enterprise software market. The deal has implications for Java apart from the PersonalJava- devices the Sun has been predicting for some time now. AOL is likely to launch some sort of TV-based service in the future that could use Java in the set-top boxes, and the deal will also bring Netscape back into the Java development fold. It basically abandoned doing its own Java work for each platform it supported because it proved uneconomical. McFarlane says AOL will also provide a direct channel to user’s desktops through which Java can be delivered. But if AOL sticks with Internet Explorer, that will not really help Sun directly. Sun closed up $1.625, or 2.3% at $72.9375.

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