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HP "reassured" on AOL-Netscape deal

CEO Lewis Platt says HP has been told it can continue selling computer hardware to AOL and reselling Netscape's software.

SAN FRANCISCO--Hewlett-Packard initially worried about the impact of America Online's acquisition of Netscape, HP CEO Lewis Platt said today, but was soon told that HP could continue selling computer hardware to AOL and reselling Netscape's software.

"I was worried but was reassured," Hewlett-Packard's top executive told, noting that existing contractual arrangements will remain in place after the acquisition.

HP's concern stemmed from the prominent role to be played by Sun Microsystems, an HP rival in workstations and mid-range computers, in reselling Netscape's enterprise applications. AOL also agreed to buy half a billion dollars of Sun hardware, a coup for Sun because it has not been a major AOL supplier.

Netscape co-founder Marc Andreessen told that the AOL-Netscape-Sun deal was structured so that AOL, not Sun, will own Netscape's e-commerce and server applications.

"Sun doesn't own the software, and AOL-Netscape can have relations other than Solaris [Sun's version of Unix]. We are not constrained legally or strategically," Andreessen said, noting that Solaris is Netscape's most popular platform and that HP's sales force has sold limited quantities of Netscape software.

Andreessen acknowledged in an interview that Sun's ability to sell software, something that has not been hardware vendor Sun's core competency, is a key to the deal's success. But he expressed confidence that Sun will deliver.

"Sun can do it because they need to. Customers are getting real tired of doing their own systems integration or paying consulting firms huge amounts to do it," Andreessen said. He argued that the computer business is evolving from strictly hardware and software sales to a more solutions approach, which he credited IBM with maintaining.

Not everyone shared Andreessen's enthusiasm for the AOL deal.

"Mergers always make me sad," said industry commentator Robert Metcalfe, who created the Ethernet technology. "I think it was a good deal for Netscape shareholders, but maybe not for the industry or for customers."