AOL-Netscape deal set to boost European net growth

The two agreed on Tuesday to a dollars 4.2 billion merger, which will

bring together AOL’s 14 million subscribers - more than 500,000 of whom

are in the UK - and Netscape’s business software and Netcenter portal

website.

In Europe, the two companies present a credible challenge to Microsoft

in both the consumer and business-to-business markets. It is the latter

that analysts are tipping as the next major area for growth in

Europe.

Jane Ostler, managing partner at MindShare Digital, said: ’With Europe

the next big battleground, this merger boosts the potential for

e-commerce, particularly in the business sector.’

The third string to the deal - a tie-up with Microsoft’s rival

workstation manufacturer, Sun Microsystems - could increase the new

venture’s chances of success in the online business market. Sun, which

is also the developer of Java internet software, is to develop and

market Netscape’s software as well as supply hardware and sign a

marketing deal, a move that will create a powerful anti-Microsoft

alliance.

Emily Green, managing director of Forrester Research Europe, said:

’Netscape has some powerful business tools and the combination with AOL

and/or Sun will help to bring those tools to market and could have a

major impact in Europe - especially on Microsoft.’

AOL’s online media ambitions will also get a boost. Over the past 18

months, AOL has depended less on subscription revenues, instead tying up

deals with online retailers such as Music Boulevard and Quixell.