The Ovum View: What will become of iPlanet?

On 17 March 1999, AOL completed the $4.3bn acquisition of Netscape. When the acquisition was first announced in November 1998, AOL also announced a three-year strategic development and marketing alliance with Sun Microsystems.

However, this was not a typical marketing alliance - it involved the transfer of significant funds between the partners for the duration of the agreement: $350m from Sun to AOL for the rights to market the Netscape software, and $500m from AOL to Sun for the purchase of servers and services.

At the Java Enterprise Solutions Symposium in April 1999, Sun announced a new software product called i-Planet for the deployment of Java-based portals for access to email, calendars and files. By July of the same year, i-Planet had lost some punctuation to become iPlanet, and a software product had become the brand for the Sun-Netscape alliance, also known as iPlanet E-Commerce Solutions.

iPlanet is now a 2,500-strong company, based in Santa Clara, California, with employees drawn from Netscape's software division and Sun's SunSoft division, together with those from a number of Sun acquisitions.

iPlanet provides a broad portfolio of products, including ecommerce, portals, communications, enterprise application integration (EAI), B2B exchange and application development, and unified user management.

The announcement of the alliance coincided with AOL's acquisition of Netscape and it is useful to consider AOL's original motivations. In 1998, online business models were predicated on user numbers and, at the time, Netscape Netcenter, the default homepage for all users of Netscape's browser with nine million registered members, was highly attractive - especially given the threat posed by Microsoft with MSN and Internet Explorer.

Historically, AOL had not been perceived as a pure-play internet provider, with its approach of providing access to a restricted (AOL-controlled) subset of the internet. Netscape, as one of the leading internet brands, promised to help change those perceptions. However, these motivations are inappropriate in today's post-dot-com era.

According to the press release announcing the alliance, its primary targets were enterprises, while the primary target for AOL is the consumer segment. This raises doubts as to the importance to AOL of the server-side iPlanet technologies - doubts which have only been reinforced with the merger of AOL and Time Warner, and the increasing focus on content and services.

During Sun's October 2000 results briefing, Mike Lehman, its CFO, stated: "We already own all the intellectual property rights [of iPlanet]", while Scott McNealy indicated that less than 30 per cent of the iPlanet staff were from AOL. This shift in the alliance towards Sun was further emphasised in August 2001 when AOL announced plans to cut 500 staff at iPlanet, many of whom were almost immediately rehired by Sun.

Despite the insistence of an iPlanet spokesperson at the time of the staff cuts that the alliance was continuing, the first edition of iPlanet's Partner Monthly Newsletter for EMEA (http://www.sun.ie/iplanet/ ) tells a different story: "At the conclusion of the contract, iPlanet will become a part of Sun Microsystems."

During an interview in mid-October 2001, Guy Norgrove, director of Northern Europe at iPlanet, stated: "The partnership comes to a formal end on 17 March next year, when iPlanet becomes a division of Sun."

To summarise, one partner of the alliance no longer has the same motivations that originally led to the creation of iPlanet. It is focused on content and services, rather than software infrastructure, and is in the throes of dealing with one of the largest mergers in corporate history during a major economic downturn. The other owns all of the intellectual property and employs twice the number of staff. It should therefore come as no surprise that iPlanet is destined to become a division of Sun.

Sun faces stiff competition in its core enterprise market from HP (in the future, HP plus Compaq), IBM and Microsoft. Software infrastructure is an increasingly important feature of the competitive landscape - be it application servers to support the development and deployment of multi-channel ebusiness applications enterprise application integration (EAI) to enable re-engineered or new business processes spanning heterogeneous off-the-shelf and custom-built software or web services.

Perhaps the most visible aspect of Sun's software strategy is its Open Net Environment (ONE) - Sun's vision and architecture for web services. The iPlanet Application Server is a core component of this vision. In August 2001, iPlanet announced two new editions of its integration platform: iPlanet Integration Server EAI Edition and B2B Edition (which is very closely aligned with Sun ONE).

It also seems likely that the iPlanet solutions for user management will play a role in the recently announced Liberty alliance - a response to Microsoft's .NET My Services (the erstwhile Hailstorm and Passport).

Much of the interest (and hype) concerning web services is based on the promise of true interoperability, independent of programming language and platform, and the potential realisation of the long sought-after 'software as a service' model - with open XML-based standards as a key enabler.

Open standards, platform independence and software as a service - how can this be a competitive battleground? For Sun (and the other key protagonists), it is less about having the best web services platform and more about having a credible position. iPlanet provides Sun with many of the components required to establish this position.

Click here to find out what happens to the users when iPlanet gets absorbed:
http://www.silicon.com/a49193

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