[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 8 April, 2004, 17:15 GMT 18:15 UK
Caught between Microsoft and Apple
By Tim Weber
BBC News Online business editor

Real Networks boss Rob Glaser
Real Networks founder Rob Glaser takes on Microsoft - again
Digital media firm Real Networks has started the global roll-out of its latest audio and video player, Realplayer 10, but is it good enough to secure the company's future?

If one believes the hype, RealPlayer 10 is the software to end all digital media woes.

For consumers, it is the first free player that can play all major online media formats, from Apple's AAC (iPod) and Quicktime formats to Windows Media, MPEG-4, MP3 and many more.

And for Real Networks the launch comes at a crucial time, caught as it is between the Microsoft rock and the Apple hard place, both of which are pushing hard into the company's market place.

Microsoft media player keeps gaining market share, while Apple in recent months has managed to grab headlines with its iTunes service.

Real Networks
Sales: $202.4m (2003)
Loss: $21.5m (2003)
Headquarters: Seattle, USA
Staff: 744

However, speaking to BBC News Online, Real Networks chief executive Rob Glaser is bullish: "If having 350m users worldwide is between a rock and a hard place, then it's a very nice situation to be in."

Realplayer 10, "with its great flexibility and ease of use," will give Real the edge in the consumer market, he believes.

Helpfully, two weeks ago the European Commission fined Microsoft 497m euros ($613m; £331m) for bundling its media player with the Windows operating system. This, Mr Glaser says, has set European computer makers "on the path to have more choice and flexibility" and load Realplayer on their computers.

And dismissing Apple's iTunes service, he points to Real's Rhapsody music service with 1.3m subscribers - which "in the United States is number one".

Real's 'Swiss army knife'

Rhapsody's "jukebox in the sky" subscription model apart, though, Realplayer 10 is truly at the centre of Real's efforts to stay in business.

Mr Glaser calls it the "Swiss army knife" of digital players, providing not just playback of audio and video in unprecedented quality, but allowing users to burn CDs and organise their digital music and video libraries (while a paid for version of the software provides even more options).

Realplayer 10 screen shot
Realplayer10 promises plenty of free tools

More importantly, though, even though the basic player is free, it is a tool for Real to make money.

"The software part of the business, the technology part is still the heartbeat of what we do, because it powers it," says Mr Glaser.

"The best way to monetise" the player's value, Mr Glaser has found, are premium services - selling downloads, and subscription access to music, videos and news to the online public, ideally in broadband quality.

Real trouble

The shift has been dramatic.

Just a few years ago media services generated just 40% of revenue. Now they bring in 75%, during a time when the firm's income grew six quarters in a row.

However, without careful management, this could also turn into Real trouble.

Internet bulletin boards abound with hate mail postings about Real, accusing the firm's media players of taking over the computers of customers, and being highly intrusive as they try to push users towards premium services.

Real web site screen shot
Another click crashes into the subscription hurdle

"We've listened, we've heard you," Mr Glaser says to his critics, clearly at pains to stress that Real's latest player gives users full control over what the software does and doesn't do - while at the same time allowing casual users to launch and play the software straight away.

And indeed, setting up the new Realplayer 10 - which is now available in US, UK, German and Japanese versions - is much more straightforward and empowering than ever before.

At the same time, though, despite the superior picture quality of its video streams - probably the best on the market - Realplayer still has not given up the annoying habit of showing a baffling plenitude of links, too many of which end in cul-de-sacs with a "subscription-only" message at the end.

Fighting giants

Launching Realplayer 10 should allow the company to get its branding into focus, though, following a confusing succession of players names like G2, RealOne and others.

"Most people kept calling it Realplayer anyway," says Mr Glaser, "so we called the media service RealOne, and as we've been doing this for 10 years we called the player version 10."

But the newfound focus could easily get blurred as the company gears up for what could become an epic legal battle against its old nemesis Microsoft, in a $1bn private antitrust law suit brought last year in a US court.

The court action, Mr Glaser says, will help to create a level playing field in the player market.

He rejects comparisons to failed browser maker Netscape, and suggestions that Real could run out of time and money before the trial is over.

The law suit, Mr Glasers says, could cost up to $37m. Real has $375m in the bank, which he believes to be enough of a "war chest".

Ironically, Mr Glaser helped to build up his software rival, being a top executive and Bill Gates protégé at Microsoft until he left in 1994 to strike out on his own.

Mobile future?

And there is always the prospect that Seattle-based Real could go the Sun Microsystems way and agree a juicy settlement with Microsoft, which would help to balance the books after four straight years of losses.

But despite the fighting talk, the prospect of a return to operating profit later in the year, and a buoyant legal online music market, Real's future is still uncertain.

Microsoft will appeal against the EU ruling. Bill Gates could play hardball in US courts.

Anyway, can a firm of Real's size really compete with the marketing prowess of Apple and the sheer weight of money deployed by Microsoft?

Mr Glaser believes it can. On mobile phones, for example, Real dominates the market for music players.

But Real will have to keep developing very nifty software to secure its place in the digital media marketplace.




SEE ALSO:
Microsoft hit by record EU fine
24 Mar 04  |  Business
The growing online music world
14 Nov 02  |  Entertainment
Real boss tackles online piracy
18 Feb 03  |  Technology
Sun reaches deal with Microsoft
02 Apr 04  |  Business
Microsoft plans web music service
24 Mar 04  |  Entertainment


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific