Microsoft to acquire eShop for Internet retailing system

Microsoft has signed a deal to acquire a Californian company and its Internet merchandising software and will incorporate it into Microsoft Merchant by the end of the year.

Microsoft has signed a deal to acquire eShop and will incorporate eShop's Internet merchandising software into its Microsoft Merchant product offering by the end of the year, Microsoft has announced.

The 35-person company, based in San Mateo, California, operates an Internet shopping mall, eShop Plaza, and is also the developer of eShop Technology, which can be used by both merchants and electronic shopping centre operators to build online commerce operations. While Microsoft will move eShop Mall customers such as Tower Records and 1-800-FLOWERS to a similar mall on the Microsoft Network, the focus of the acquisition is eShop's development tools, says Paul Maritz, group vice-president of the platforms group at Microsoft.

By acquiring eShop, Microsoft will "be able to come out with a more mature, flexible product than we would otherwise have been able to do," says Maritz. "Later this year we'll be able to ship a version three product rather than a version one product."

The eShop Technology software currently runs on Unix, but the company is porting it to Windows NT, says Matt Kursh, eShop's CEO. Microsoft plans to release a beta version of the tool set in August and to ship a production version by the end of the year, according to Maritz. Microsoft Merchant provides the retailing component for Microsoft's new commercial services platform for the Internet, code-named Normandy.

Microsoft's acquisition of eShop changes the dynamics of the competitive electronic commerce arena, where Netscape Communications is the Redmond, Washington, company's chief rival, according to analysts.

"Netscape was also in the hunt for this technology. By acquiring eShop rather than partnering with them, Microsoft not only gets the technology but deprives Netscape of it," says Rob Enderle, senior industry analyst at Giga Information Group in Santa Clara, California. "A lot of this may simply be marketing, but it establishes a level of experience and comfort when both experience and comfort are at a premium."

Microsoft refused to disclose financial terms of the deal, and it does not expect any antitrust issues to arise from its plans to acquire eShop, says Maritz.

EShop will move its operations to Redmond, and most of eShop's employees have agreed to make the move, according to Kursh.

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