The Internet landscape was altered dra-matically last week when America Online Inc. announced it will acquire Netscape Communications Corp. in a stock-for-stock transaction valued at $4.2 billion.
At the same time, AOL also announced it entered into a strategic alliance with Sun Microsystems Inc. to use Sun’s Java technology to develop next-generation Internet devices that will give Internet users access to AOL service from a wide variety of devices, including wireless.
According to a press release issued by AOL, a major focus of the alliance with Sun will be to use Sun’s PersonalJava embedded platform to offer AOL services “across a range of next-generation Internet devices.” Sun said PersonalJava was designed for use in small, mobile electronic devices such as pagers, cellular phones and personal digital assistants.
As such, it seems AOL is interested in extending Internet access to pagers and wireless phones using itself as the service provider. This is in line with AOL’s strategy of “AOL Anywhere.”
“We share with Sun a vision for the future in which consumers will be able to access America Online brands anywhere, at any time, and from any device, and we believe that with this alliance, we can make this happen more quickly,” said Steve Case, chairman and chief executive officer of AOL.
Already, AOL has made inroads into the wireless industry. This summer, the company inked a co-marketing agreement with Metrocall Inc. The paging carrier plans to launch an online store on AOL’s site soon. Many expect this marketing agreement to extend to other areas in the future, such as information services.
While AOL may prove an effective Internet-based information content provider, doubts exist as to whether it could pull off being an Internet service provider to wireless device users.
According to wireless-data industry consultant Andrew Seybold, editor of Andrew Seybold’s Outlook, the Internet communications model does not yet mesh well with the wireless model.
“The Internet is a browser mentality. That is not a model for handheld devices,” he said. “It’s not about browsing the Net. You need to have the device get to information you need without going through all the steps. Make the application smart enough to do this stuff in the background.”
Going further, Seybold disputed Sun’s assertion that PersonalJava works well with wireless devices.
“To me, Java and PersonalJava [are] just too huge, too cumbersome, too slow and too chatty to be of use in the wireless environment,” he said. “I think doing some more work is what’s needed.”
Sun is not alone. Other operating systems created for small devices like Microsoft Corp.’s Windows CE and the Symbian venture’s EPOC system also need slimming down to be of real use to smaller devices.
But the difference, Seybold said, is that Windows CE and EPOC both are optimized for wireless communications environments; PersonalJava is not.
Seybold said the wireless industry has been wooing AOL for some time now, lured by its massive subscriber base of 14 million, but to little avail. Wireless carriers want to provide AOL a wireless solution and, in turn, make AOL subscribers wireless subscribers as well. But Seybold said AOL is not playing ball.
“AOL’s attitude is, `We don’t care about our existing customers; we want new customers. Come to me when you can get me new customers,’ ” he said.
In other words, AOL is not interested in extending wireless options to increase value to its existing customers. The company instead wants to tap into the customer base of wireless providers to gain more subscribers for itself.
Yet Internet service providers know they eventually will have to find a way to attract wireless device users. To date, the Internet has been a communications medium used primarily by users of personal computers. But as the wireless industry has been quick to point out, more wireless handsets were shipped last year than computer terminals. And therefore, the wireless handset user market is of great interest to the Internet industry.
