America Online in one fell swoop got its own Web browser and portal site through its acquisition of Netscape, leaving ISP competitors scrambling to figure out what it all means.
AT&T refused to comment on the deal. MCI WorldCom, Sprint, and Cable & Wireless were still preparing their responses.
Analysts said the acquisition will give AOL an edge with business users, a market in which the company had been lacking.
"The crown jewel was [Netscape's portal site] Netcenter," said Tim Bajarin, president of Creative Strategies, in San Jose, Calif. "Netcenter is an important business-to-business portal."
In the coming year, portals such as Netcenter will gain popularity as corporations realize the importance of both establishing a presence at these high-profile sites and of bringing customized portals into their enterprises for internal use.
"AOL has focused on the consumer and has had trouble penetrating the business space," said Frank Dzubeck, president of Communication Network Architects, in Washington.
Studies show that Netscape's Netcenter has more business users, while AOL has more consumer users.
Netcenter led Netscape's growth in the fourth quarter with revenues for the portal growing by 24% to $US48 million.
However, "AOL will need more than Netcenter to move into the business market," said Rosemary Cochran, an analyst at Vertical Systems Group, in Dedham, Mass.
But the new AOL-Netscape online union could still spell trouble for others seeking to win business customers for portal sites.
For example, the AOL-Netscape deal may hurt Microsoft's plan to establish its Microsoft Network as a major portal player.
"AOL already has CompuServe, and [the addition of Netscape] gives them an even more pure Internet presence," said Chris LeTocq, an analyst at Dataquest, in San Jose, Calif. "That's a very competitive environment for Microsoft."
But other observers did not believe the acquisition would affect which browsers ISPs chose to use.
"The majority of ISPs will offer both browsers," said Rufus Connell, an analyst at Frost and Sullivan, in Mountain View, Calif.
As for AOL, the company still plans to offer both browsers.
America Online Inc., in Dulles, Va., is at www.aol.com.
(Bob Trott and Jessica Davis contributed to this article.)