When America Online acquired Netscape Communications last week, the gnashing of techie teeth could be heard throughout Silicon Valley. Internet bulletin boards and publications favored by the techno-elite spoke of doom, and the end of the Internet as we know it.
In part, this was an understandable response to the untimely demise of Netscape, the young company that became an icon for techies after it almost single-handedly popularized the World Wide Web. But even more galling to the techno-elite was the fact that the inheritor of Netscape's technology was AOL, a company many techies regard as pedestrian and philistine. They see it as the gateway through which the unwashed masses have flooded onto the Internet to pollute a medium they once called their own.Anything that horrifies Silicon snobs must be good for the rest of us. In fact, the AOL-Netscape deal holds great promise for mainstream folks who just want to use online content and services without a lot of hassle. It could accelerate the true democratization of the Internet and provide healthy competition for Microsoft, which performs best when it's up against a smart adversary. Microsoft has found AOL to be a much more formidable opponent than Netscape.
Even more important, the AOL-Netscape deal seems likely to speed the move toward information appliances -- digital devices, such as the Internet boxes on top of TV sets -- that can access the Internet and e-mail more easily, cheaply and reliably than today's personal computers.
The acquisition included a major technology-and-sales deal with Sun Microsystems. That company controls the Java programming language, one of the technologies on which the new information devices can be based. If info appliances get a boost from the new AOL, the Internet will have a better chance of becoming a mass medium.
What makes AOL a great steward for Netscape's technological crown jewels is the fact that it isn't primarily a technology company. Instead, AOL is a service company focused on providing consumers with content, commerce and online communities of interest -- and then marketing those things like mad.
From AOL's headquarters in the Virginia suburbs of Washington, across the street from a Wal-Mart and light years from Silicon Valley, the world looks like a consumer marketplace, not a computer lab. That's why AOL is by far the most successful company on the Internet, and the best-known online brand name.
Silicon Valley sages speak with reverence about "portal" sites, Internet gateways like Yahoo! or Excite. But, unlike AOL, none of the other portal companies collects $22 a month from nearly 15 million subscribers. By some estimates, as much as 40 percent of the Internet traffic from U.S. homes comes through AOL.
I don't mean to suggest that AOL is technically stupid. Chairman Steve Case, a brilliant marketer, was lugging around computers on business trips and tapping into online services long before most people. Since its disastrous busy-signal crisis of a couple of years ago, AOL has built an unmatched capability to serve large numbers of users.
Mr. Case and other AOL officials, however, have always understood that technology is only the enabler of an online business, not the central attraction. To keep its services available to average users, the company avoided some cutting-edge features deemed too complex or too taxing for standard modems.
By contrast, Netscape was all about cutting-edge technology, and seemed to aim its products at people and businesses already a part of the techie club -- the type that are connected to the Internet using the fastest computers and the highest-speed wires. If you walked into Netscape headquarters carrying a standard, slow, dial-up modem, people there might mistake it for a garage-door opener. Now, Netscape can give AOL a welcome technology infusion, while AOL gives Netscape lessons in service and marketing.
Netscape decided not to focus on the new info appliances for Internet access, but AOL has been quietly planning to enter that market, in competition with Microsoft's WebTV subsidiary.
AOL's Mr. Case is determined to be a part of the next wave of smart devices, which could attract millions who don't use PCs. He has been toying with the idea of a set-top box, working with Sun for months on a possible design based on Java. The new AOL-Netscape-Sun relationship means an AOL-based appliance may happen as soon as next year. But AOL's future plans in this area won't be limited to joint efforts with Sun.
AOL could still blow it. The company needs to tone down its heavy-handed efforts to sell things to members. It should phase out those intrusive pop-up ads in favor of smarter and subtler approaches. It also needs to do a much better job of personalization in its core service and on its Web sites, allowing users to customize the screens they see. Netscape has valuable expertise in this area. And it must continue and strengthen its efforts against online junk mail, which threaten to make its popular e-mail services useless.
If AOL keeps paying more attention to people than to computers, it could use Netscape's technology talent to help a lot more average people get online and make the Internet a part of their lives.
© 1998, Dow Jones & Co. Inc.