iPlanet, the alliance between America Online/Netscape and Sun Microsystems, is quickly moving closer to Sun.
After AOL Time Warner announced last week that it would eliminate 500 positions at iPlanet, Sun indicated that it would place about 300 of these employees on its payroll. Later in the week, a senior Sun executive stated that iPlanet would become a Sun division in March 2002, when the three-year partnership with AOL expires.
Monday's announcement of new iPlanet integration software that aligns with the Sun One Web services initiative is the latest indication that the joint venture has become a Sun satellite.
AOL entered into the iPlanet partnership with Sun in March 1999 as a consequence of AOL's purchase of Netscape Communications. It purchased Netscape--and its home page, the default home page for millions of Netscape browser users--partly as a hedge against growing competition from Microsoft. AOL contributed the server-software technology acquired with Netscape to the iPlanet partnership.
Three years later, AOL has not gained any significant advantage from iPlanet, and the partnership is not bringing in revenue that even approaches a minimal return on the investment. We believe the server-side iPlanet technologies have never been of major importance to AOL, whose focus on Web content and services (rather than technology) has been reinforced by its merger with Time Warner. These factors, plus the increased focus on the bottom line mandated by the present economy, are driving AOL to slash its iPlanet work force.
The key questions are how long Sun can afford to maintain its present level of investment in iPlanet and what lasting role iPlanet will be able to carve in the market. Scott McNealy, Sun's chief executive, has stated emphatically that his company is strongly committed to its investment in iPlanet and plans to build it into a strong software competitor against IBM and BEA Systems. However, meeting these goals will require iPlanet to overcome significant obstacles.
IBM's WebSphere and BEA's WebLogic currently dominate the Java application server market, while iPlanet is arguably a distant third. For Sun to have any chance of turning iPlanet into a strong alternative, it needs to make the same level of development and marketing investment that it makes in its Solaris software. Technical superiority will not be enough. iPlanet must take market share away from either BEA or IBM--Sun's ostensible partners in the Java movement.
Stirring trouble in the Java camp
Increased focus on iPlanet's application server could create a new round of platform wars inside the Java camp, with IBM and one of Sun's most important allies--BEA--further balkanizing the Java 2 Enterprise Edition (J2EE) environment just when it faces a strong challenge from Microsoft's .Net. The Sun sales force sells a large number of Sun servers running BEA's WebLogic. Although Sun would like to win some of those software revenues, it remains primarily a hardware company.
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Sun renews Web-services effort
Although iPlanet's application server is not prospering and poses potential conflicts with Sun partners, its other products are faring better. For example, iPlanet is seeing growing interest in and sales of its enterprise portal offering. More importantly, iPlanet dominates the Lightweight Directory Access Protocol (LDAP) directory market, with implementations in more than 60 percent of Fortune 100 organizations. This summer, iPlanet rewrote and expanded its Directory Server product line, adding a dual-master version of the flagship Directory Server product, a rewrite of the metadirectory product (Integration Edition), and the introduction of a competitive product in the Web single sign-on market (Access Manager).
These and other recent steps indicate Sun's commitment to its iPlanet Directory Server investment and its faith in the profitability of this product line, as well as its potential to expand from its LDAP presence to compete in the identity and permissions infrastructure market.
If iPlanet becomes a Sun division in March, which now seems likely, this will not only help control costs, but will also demonstrate Sun's belief that application server technology is important to its future. We expect some iPlanet technology eventually to be incorporated into Solaris.
Existing iPlanet application server users and independent software vendors should carefully track Sun's commitment to iPlanet. New Java application server users should give first consideration to BEA and IBM as the clear leaders in this realm. In the directory market, iPlanet provides good technology, and we expect continued strength for its directory products.
Meta Group analysts William Zachmann, David Cearley, Dale Kutnick, David Folger, Mike Gotta, David Yockelson, Matt Cain and Earl Perkins contributed to this article.
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