Is RealPlayer the Next Netscape?

[DudeAsInCool]

Musical Chairs With the Big Boys

By STEVE LOHR

Published: March 21, 2004

Is RealNetworks the next Netscape?

Rob Glaser, the founder and chief executive of RealNetworks, a pioneering maker of music-playing software for the Internet, bridles at the notion. "Our situation is very different in some important ways," he said in a lengthy interview last week. (Before he founded RealNetworks, Rob Glaser worked for Bill Gates, whom he has since sued. His music service is going head-to-head against that of Steven P. Jobs.)

Netscape, of course, was a path breaker in Web-browsing software and Exhibit A in a sweeping government antitrust case that resulted in a stinging legal setback for Microsoft. Yet Netscape soon faded as a force in the industry.

The fate of RealNetworks is a question awaiting an answer. But the similarities between it and Netscape are uncanny, especially now that the European Commission is preparing to rule against Microsoft on Wednesday after a final round of settlement talks collapsed last week.

The commission will order the company to offer a version of its dominant Windows operating system for personal computers without a digital media player, a market in which RealNetworks was the front-runner until Microsoft moved in.

The ruling, if upheld on appeal, may make it easier for RealNetworks to get its software on more personal computers. But it will not undo the damage already done to the company's business.

In many ways, the European case can be seen as a sequel to the American antitrust suit against Microsoft. Netscape was at the center of that case, which Microsoft lost but then settled with the Bush administration in 2001. Some of the names have changed, but the pattern is the same.

In both cases, Microsoft was accused of being a nasty monopolist that bundled new software into Windows, gave it away and engaged in bullying tactics intended to stifle competition by crushing the early leader in an emerging market.

Competing on those terms proved to be near fatal for Netscape, which was eventually acquired and exists today in a forlorn corner of Time Warner. And it has not been any easier for RealNetworks, which has lost money for four straight years - $245 million in red ink.

As if battling Bill Gates were not enough, Mr. Glaser also finds himself pitted against perhaps the second-most-famous computer entrepreneur in the land: Steven P. Jobs ofApple Computer. Apple's iTunes music store has recently overshadowed RealNetworks' Rhapsody as the stellar brand in digital music.

The RealNetworks story has the added theme of former friends turned enemies. Mr. Glaser, 42, worked for a decade at Microsoft, where he became one of Mr. Gates's trusted lieutenants, and a very rich man. He left and founded RealNetworks in 1994, parting on good terms. Microsoft took a 10 percent stake in the start-up, originally called Progressive Networks.

But then Microsoft itself got into the digital media market, and the partners became adversaries. In 1998, Mr. Glaser testified before the Senate against Microsoft, describing what he said were the abusive tactics of his former employer. Later that year, Microsoft announced that it was selling its stake in RealNetworks.

The most recent salvo from RealNetworks came three months ago, when it filed a private antitrust suit against Microsoft, seeking $1 billion in damages. Despite the bitter rivalry, Mr. Glaser maintains that his company is neither defined nor obsessed by its huge competitor and Seattle area neighbor. "This is not some quixotic Ahab-and-the-whale thing," he said.

Mr. Glaser may be protesting too much, but there is a strong case to be made that his company's future will not be just a rerun of the Netscape script. RealNetworks seems to have the quick instincts of a survivor. Its losses are declining sharply, and it has overhauled its business.

For most of its young corporate life, the main business of RealNetworks was software - the software needed to play on a personal computer the music or video received in digital streams over the Internet and the software needed by developers and companies to create and send it.

Particularly in the last year, the company's digital media offerings to consumers - its Rhapsody music service, computer games and streaming video of Nascar races, N.B.A. games and news from CNN and ABC - have grown sharply. Most are sold as subscriptions, at $5 to $10 a month. In 2001, software accounted for roughly 60 percent of RealNetworks' revenue; by the fourth quarter of last year, the software share had fallen to 25 percent. Over the same period, the share of revenue from consumer services more than doubled, to 75 percent.

TODAY, RealNetworks can be thought of as the Internet equivalent of the early cable television networks of decades ago, like MTV or ESPN. And it is much less dependent on software than it was before, and thus less susceptible to being run over by Microsoft. RealNetworks says it will return to profitability in the second half of this year, excluding the legal costs of suing Microsoft, estimated at $3 million a quarter.

You can read the full story here:

http://www.nytimes.com/2004/03/21/business...ney/21real.html

[Ken]

I think everyone is missing the point.

Real Networks is losing money, because they suck.

Their RealOne (and previous versions) player is the most buggy, bloated peice of crap on planet Earth. It's intrusive, parasitical, and annoying.

Comparing them to Netscape is like comparing Apples, and something that sucks.

Did I mention they suck?

[slum_goddess]

shameless self-promotion.

[rainbowdemon]

RealPlayer is so bad it could almost be called a virus! It won't come anywhere near my comp!!

:poop:

[rainbowdemon]

::off topic::

Ken, I'm sure glad the bouncy girl is back!