AOL turns up the heat in browser wars

NEWS

America Online has dropped Internet Explorer from a test version of its software for Mac OS X, the latest sign that the Internet giant wants a rematch in the browser wars with Microsoft. AOL for Mac OS X version 2 includes an integrated browser using technology created by Netscape Communications, according to a note to beta testers describing the software's features, which was seen on Thursday by CNET News.com. In addition, the upgrade includes a new "aquafied" look "in the spirit" of OS X's liquid-like user interface, as well as instant messaging and Buddy List support for chatting with Mac.com users, among other things, the note said. The Mac switch comes after AOL released a version of its CompuServe online service based on Netscape's Gecko technology instead of IE. In an e-mail to software testers in March, AOL said it also is trying out Gecko on its latest software, AOL 7.0. Gecko technology allows Web pages to be displayed, serving as a foundation for Web browsers. AOL and Netscape are both divisions of AOL Time Warner. AOL's Gecko tests signal the latest salvo in an ongoing battle between two technology giants vying for domination of the Internet. AOL has the largest Internet audience, and switching to its own browser could greatly affect how those people view the Web. Most browsers do not generate any direct revenue, but they can influence where Web surfers go and what applications they use. Microsoft and AOL have theoretically squared off in the browser market since AOL announced in November 1998 that it would acquire Netscape for $4.2 billion. But AOL had until recently avoided a direct confrontation, sticking to a long-term deal that made IE its default browser in exchange for distribution of its software in new versions of Microsoft's Windows operating system. The relationship has increasingly shown signs of wear. Last summer, the two companies tangled over terms for bundling AOL into Microsoft's Windows XP operating system. Talks dissolved after the two companies could not agree on terms of the deal. This year, Netscape sued Microsoft, capping years of allegations that the software giant had forced its way into the browser market by abusing its monopoly in desktop operating systems. AOL and Microsoft did not immediately return requests for comment. Separately, another key IE bundling deal may be up for grabs: Microsoft and Apple Computer are nearing the close of a five-year agreement entered in August 1997 that has bundled Internet Explorer on Macs. Analysts downplayed the significance of the Netscape switch for Mac, saying the browser wars ended years ago. Since IE 6 was unveiled last August, Netscape's browser has fallen from about 12 percent of the market to just 7 percent, according to research published in March by StatMarket, a division of audience measurement service WebSideStory. "I'm not sure how this transfers into shareholder value" for AOL, said analyst Paul Kim of investment bank Kaufman Bros. "There is no way to monetize browsers. This is more like AOL saying, 'Hey, I'm not going to use Microsoft's products.'" Apple has made a big bet on OS X, the latest and greatest operating system for its Mac personal computer. OS 9 is used on the majority of the 25 million Macs in service. Earlier this month, Apple CEO Steve Jobs said he expects some 5 million people will be using OS X by year's end, up from 1 million at the start of 2002. As AOL has drifted away from Microsoft, it has drawn closer to Apple. A new version of OS X due out this August will support instant messaging between Mac and America Online's closely guarded AOL Instant Messenger service. Last year, Apple switched the default home page for Mac to Netscape.com from Excite.com, following the bankruptcy of Excite parent Excite@Home. In its note to beta testers AOL suggested that the latest browser switch offers a significant boost for consumers. "Since the beginning of the Web, industry groups and Web site developers have clamored for a browser that would support currently accepted standards for Web content," the note reads. "If you are surfing the Web, pages will look better, and you can view all the latest eye-pleasing special effects, graphics and styles that Web developers put into their sites."

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