21 January 2002 Media and Internet giant AOL Time Warner is at the centre of rumours that it is in talks to acquire open source software vendor Red Hat. Both companies have declined to confirm or deny the reports and no amount of money – or even reliable sources – have been quoted.
Reports first surfaced in the US press over the weekend. AOL is the largest Internet service provider (ISP) in the world and controls the second biggest cable TV network in the US.
The reports are based on a belief that AOL is looking for its own embedded operating system to use in set-top boxes and other non-PC devices. It may also be looking for an alternative to Microsoft’s Internet Explorer upon which AOL’s proprietary browser is based.
However, AOL’s unsuccessful stewardship of Netscape, the Web browser pioneer it acquired in December 1998 for $4.2 billion (€4.76bn), suggests that such a purchase would be foolhardy.
Under AOL’s ownership, Netscape’s share of the browser market dwindled to under 15% by December 2001, compared to a more than 80% share for rival Microsoft. As late as June 1998, Netscape could still claim to be the browser of choice for the majority of Internet users, despite intense competition from Microsoft.
Netscape’s enterprise products, such as its ecommerce and directory software, was hived off into a separate company, called iPlanet. This is now wholly managed by systems vendor Sun Microsystems and is expected to be acquired by Sun in March 2002, when, under US tax law, AOL will no longer be liable for capital gains tax for selling the unit on.