Analyst: Real and Microsoft deal ‘doesn’t change the dynamics for Apple in any way, shape or form’

John Borland for CNET talked to RealNetworks’ CEO Rob Glaser on the occassion of the announced end of RealNetworks’ $1 billion antitrust lawsuit against Microsoft. Microsoft has agreed to pay RealNetworks $761 million and promote Real’s “Rhapsody” music service via MSN. Borland asked Glaser, “How do you think this positions you and Microsoft jointly against Apple, at this point?”

Glaser: With regards to services for consumers, which is our focal point, I think it positions us both extremely well. I think the missing link, at this point, is hardware that a consumer finds compelling, in terms of the portable-music category. For the portable space, I think it’s fair to say that the iPod is still the best product. I think we and Microsoft have an incentive to work with the hardware community to create better solutions than have been created thus far, and I think we’ll do it, but I think that is something that plays out over time. This Christmas, the iPod will be the biggest seller, no matter what, and I think odds are good it will be the biggest seller next Christmas. I’m hopeful that next Christmas, by ’06, there will be a worthy competitor from the device side, but we have to get our brethren in the hardware business to help us on that one.

Full article here.

In another article for CNET, John Borland writes, “Indeed, if the settlement of RealNetworks’ $1 billion antitrust suit against Microsoft represents the closing of a chapter for both companies, their simultaneous alliance on Internet music shows how completely the digital landscape has changed for each in the past few years. It is now Apple, and its seemingly unending stream of digital music successes, that threatens the future for both Microsoft and RealNetworks.”

Borland writes, “Whatever its impact on RealNetworks and Microsoft, the deal is unlikely to change the dynamics in the broader digital music market anytime soon, analysts said. Apple’s iTunes music store, and its iPod music player each retain more than 80 percent of their respective markets. That dominance has been locked into place by consumers’ ongoing love affair with the iPod, and rival MP3 manufacturers’ inability to create a similarly popular product… The settlement ‘doesn’t change the dynamics for Apple in any way, shape or form,’ said Jupiter Research analyst Michael Gartenberg. ‘If they weren’t concerned yesterday, they don’t have any more reason to be concerned today.'”

Full article here.

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In the digital music market, the Apple locomotive cares little if the Microsoft cow on the tracks has picked up a Real flea or not. There won’t be any less or more cowbell at impact. As usual, Glaser’s opinion of his company’s importance is as over-inflated as his…

Related articles:
Microsoft-RealNetworks alliance ready to take on Apple in online music market? – October 11, 2005

22 Comments

  1. I have not given the competition a second thought since I switched to the Mac pplatform last year (they’ve given me no reason to). If Apple/iTunes/iPod should let me down, I will just do without. How sad for them. It really seems as though Microsoft has to just SCRAP everything they have done up to now and start over with a new philosophy (and OS). The sad thing is this will never happen. They will just try their best to imitate Apple in a half-assed way, repackage the same-old-thing, and worst of all, I fear, litigate against Apple to steal a piece of the pie. How pitiful! I just hope that Apple will always keep in mind that the key to their success has been, and always will be, to develop ,thoughtful, innovative and high-quality products that work harmoniously with one another. Go Apple!

  2. First Post

    “The enemy of my enemy is my friend”. I believe this must have been the common ground MS and Real found.

    Whatever – the only play they have at this point is partnering with CONTENT providers who will give exclusive rights to WMA as the digital rights management for their entire catalogs/libraries. But I wouldn’t bark up Pixar or Disney/Viacom/ABC’s tree. So I would guess Sony, a long time Apple competitor in the chic computer market. Sony Music is already resisting Apple in Japan. Winning a WMA exclusive for music and video would be huge.

    Then again, it just may mean a lame duck format that will prevent those titles from being purchased by 85% of the digital media purchasing world.

    Good luck with that.

    MDN word: long

  3. Gates & Co. should just give up – we don’t want their shit. The a-holes can’t seem to take “No!” for an answer. Eventually they’re going to lose their minds and try something really stupid or worse to stop Apple. I don’t think they’ll get away with it if they do.

  4. Let’s be honest – Apple is whipping Microsoft senseless these days. No attempts by Glaser (who is entirely inconsequential) or Gates throwing out some occasional double speak is going to fool the masses on who the real digital entertaiment company is.

  5. I find this interesting–and it shows the Apple advantage.

    “With regards to services for consumers, which is our focal point, I think it positions us both extremely well. I think the missing link, at this point, is hardware that a consumer finds compelling, in terms of the portable-music category. […] I think we and Microsoft have an incentive to work with the hardware community to create better solutions than have been created thus far […]”

    In other words, Real & Microsoft are fine. They’d have taken over the world by now if it wasn’t for those pesky hardware guys. Of course, the hardware guys will talk about how Real & Microsoft’s software is bad–their players are great!

    And while the two of them sit around blaming each other, Apple will just keep going.

  6. Me: I think that is exactly what MS is up to. Stongarm and use FUD to make the motion picture studios sign exclusive deals for their content. The studios also want to have their own download store, so its going to be “REAL” confusing for the windows consumer. Thanks goodness we have Apple to save us from all the crap.

  7. no guys.. the punchline was how the ‘analysts’ claim Apple was smart to do everything itself and NOT rely on partners.

    yes.

    now MS’ biggest downfall is … they’re too open??

    that’s what the analysts think.

    in other words, the exact opposite of what they ‘advised’ 12 months ago.

    analysts are retarded.

  8. Real have found a way to compete in the digital music business: find someone to give them money! Who will they sue next year to keep them from bankruptcy?

    Glaser’s comments about the paucity of hardware competition to the iPod just highlights the dilemma. Half of the people won’t buy the music because they don’t like the players, and the other half won’t buy the players because they don’t like the music service. The only complete solution is iPod/iTunes/iTMS. Frankly, just because they’ve settled their billion dollar lawsuit doesn’t mean they have quite the right relationship to get around this problem.

  9. Well, it’s a discount if Microsoft thought they would lose the one-bill’ lawsuit. A bit of promotion wouldn’t hurt too seeming that their own offerings are zip.

    Microsoft can earn more money by licensing retail software to the music industry along with a package to compete with the iTunes app, taking a cut here and there. And after the poor bast’ds bleed to death, there’s still time to foist the package to their OS users and own the competition.

    The trick is to give ’em a package that appears to be worth the price but barely fails to deliver a solution compelling to consumers — and guess who is a master at that. The music industry would be stupid to get in bed with a company with such an obvious conflict of interest, but they just might be desperate enough.

    Bill Gates plays for keeps and there’s enough monopoly money around yet to strew about.

  10. “This Christmas, the iPod will be the biggest seller, no matter what, and I think odds are good it will be the biggest seller next Christmas. I’m hopeful that next Christmas, by ’06, there will be a worthy competitor from the device side, but we have to get our brethren in the hardware business to help us on that one.”

    Hold on, he says the iPod will be the big seller this Christmas and next Christmas, now he’s either repeating himself in the same sentence in order to make his ’06 statement true – or he’s meaning that by ’07 there will be a good competitor. Either way the game would be won by apple by then, even more so than it arguably has been already.

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