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Deal paves way for 'AOL devices'

Among the many aftershocks will be the emergence of set-tops and handhelds with an emphasis on Sun, America Online, and Netscape.

Among the many aftershocks of America Online's acquisition of Netscape and its deal with Sun will be the emergence of "AOL devices."

These will include TV set-top boxes, handheld devices, and other information appliances based around the Java operating system from Sun, content from AOL, and software from Netscape.

"A new generation of devices will emerge," said Steve Case, AOL's CEO. "Java will let people connect to their Internet service regardless of those underlying hardware and operating system details. That will help advance AOL's objective of making the Internet as popular as television and the telephone."

The difference in many instances will be the fact that these devices will not need Microsoft technology, which potentially could shift the balance of power in the industry.

"The moment the consumer understands that he doesn't have a Microsoft OS in [the device], Microsoft's apparent control of the industry dramatically changes," said Richard Doherty, principal analyst at the The Envisioneering Group.

The emergence of "AOL devices" largely stems from the distinct development needs of each of the partners, according to analysts.

AOL, for example, has recognized that it needs to offer Internet access for devices other than the desktop, but so far it has lacked the software necessary to make that happen. AOL, for example, can be viewed on desktops relatively easily, but access from a Windows CE device is not easy. AOL has not optimized its client software for CE, according to sources. AOL, therefore, has been in need of development partners to move to these types of devices.

"AOL needs another market to get into," said Doherty.

"There are 15 million people out there who would buy an 'AOL Box.' Would [consumers] buy a cable set-top box for faster AOL? Sure. Buy a handheld for 'Portable AOL?' Sure. [These devices] all become AOL viewers, propelled by Java," he said.

Sun will also gain substantially from the deal, he added. Sun's so far unsuccessful labors to sell client hardware have included consumer and business Internet computers (the JavaStation), set-top box reference designs (through its Diba subsidiary), processor reference designs for clients (picoJava), and operating systems and software for devices. Sun has also acquired companies such as Beduin and Chorus Systems, to help it develop Java-based device software, but with few results so far.

By teaming up with AOL and Netscape, Sun would get access to a large base of subscribers and developers who might look at a Sun client because it is AOL-enabled and comes with a Netscape-branded browser.

The Sun deal could bring them closer to that goal. "You could imagine a series of devices based around the Diba reference design with a Java OS and a Netscape client interface," said Sean Kaldor, a consumer analyst with International Data Corporation.

Sun, Kaldor further hypothesized, may also not turn out to be the only beneficiary. Netscape also has investments in Network Computer Incorporated, the Oracle subsidiary dedicated to set-top development.