How the Combination Can Pay Off The deal comes as electronic business is accelerating at a torrid pace and corporations are scrambling to find the smartest way to rewire all of their operations WHAT THE THREE CYBER-AMIGOS WILL GAIN AOL: -- Through Netscape's Netcenter, expands its audience by 9 million Web surfers--to a total of approximately 23 million. -- Acquires slick portfolio of software for E-commerce. -- Gains credibility with techies and learns how to satisfy demanding corporate customers. NETSCAPE: -- Buys survival for brand name, research efforts, and technical team. -- As part of a well-capitalized, well-connected team, it will have a better chance of developing and selling software that can stand up to Microsoft's. -- Netcenter portal gains expertise in marketing and content creation. SUN: -- Gains access to potentially huge consumer market for its Java software. -- With AOL as a lever, the workstation and server giant can launch low-cost ''network appliances.'' -- Bolsters defenses against Microsoft expansion into the large-scale server and E-business markets. POTENTIAL PITFALLS -- AOL is paying dearly for Netscape's brand and E-commerce expertise. Neither may justify the dilution of earnings. -- AOL needs to improve customer service. Its new focus on business-to-business E-commerce may divert management. -- AOL could confuse its clientele by splitting its attention among several very different portals. -- Sun's sales and support teams, used to working with corporate clients, may not mesh with AOL's staff. -- AOL's unhip image could drive off Netscape's top techies. Juggling East and West Coast operations is also a challenge. RELATED ITEMS COVER STORY: POWER PLAY: AOL-NETSCAPE-SUN COVER IMAGE: Power Play: AOL-Netscape-Sun PHOTO: Steve Case TABLE: How the Combination Can Pay Off AOL: THE ART OF MAKING DEALS WORK COMMENTARY: SUN NEEDS A DISPOSITION TO MATCH MICROSOFT: JUSTICE STILL HAS A CASE ONLINE ORIGINAL: A HOT SUN SHOULD KEEP WARMING INVESTORS' HEARTS Return to main story

Updated Nov. 25, 1998 by bwwebmaster
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
Terms of Use