“To a multi-billionaire like Bill Gates, $761m (£428m) might not be a huge sum. But to Rob Glaser it is a windfall that could make his RealNetworks one of the key players in the future of video- and audio-playing software,” Stephen Pritchard reports for The Independent. “The $761m is what Microsoft paid earlier this month to settle an anti-competition lawsuit brought by its American rival, alleging that Gates’s company had used its Windows operating system to lock out Real’s RealPlayer software in favour of Windows Media Player… With the competition authorities on his side, Glaser, Real’s chief executive, could have fought on. Instead he settled for a deal that amounts to around two and a half years’ turnover for his company. Just over half of the settlement, $460m, is in cash. The remainder will be paid for in services from Microsoft, such as advertising for Real’s Rhapsody music service on Microsoft’s internet portal, MSN.”
Pritchard reports, “Glaser’s decision to opt for access to Microsoft services, and not just cash, might also prove astute. It cements the working relationship and puts the Rhapsody service in front of millions of MSN users, giving it a leg-up in the fight with Apple’s iTunes. Glaser’s battle with Microsoft would have made him a natural ally of Apple’s chief, Steve Jobs. But he criticises Apple for adopting closed technologies instead of open standards. ‘Microsoft takes a very wide approach to licensing its digital rights management software. It is vexing that Apple has taken a closed approach.'”
Pritchard reports that Glaser “believes handset firms and operators will pick Real as its software is open and plays a range of file formats – something the Microsoft agreement only strengthens. That, he adds, is in contrast to Apple’s strategy. ‘The Apple-Motorola phone could be a train wreck. Apple’s deal with HP [to sell iPods] was a train wreck. That end-to-end approach to designing the customer experience can be effective early on, but over time it will lose out because of the share of market forces against them.'”
Full article here.
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On October 27th, RealNetworks announced their earnings results for the quarter ended September 30, 2005. Real reported revenue of $82.2 million and net income of $11.2 million. Real’s music revenue totaled $25.0 million for the quarter.
On October 11th, Apple announced their earnings results for the quarter ended September 24, 2005. Apple reported revenue of $3.68 billion and net income of $430 million. Apple’s music revenue totaled $1.477 billion for the quarter.
How much time does Glaser plan to spend catching Apple exactly? Is Krispy Kreme now fortifying their donuts with some industrial-strength vitamins and life-extending gene therapy? In the last quarter, Apple matched Real’s entire quarterly revenue of $82.2 million in about the first 49 hours of the quarter. In the last quarter, Apple matched Real’s total quarterly net income of $25 million before lunch on the 2nd day of the quarter. In the last quarter, Apple matched Real’s music revenue of $25 million right around the 36th hour of the quarter.
Related articles:
Apple’s ‘pure genius’ will soon make iTunes’ portal the ‘number one destination on the Internet’ – July 26, 2005
Related MacDailyNews articles:
Real CEO Glaser calls Apple ‘deceptive’ with iTunes Music Store – March 07, 2005
Real CEO pitches to half empty room at tech symposium; Apple draws standing-room-only crowd – February 25, 2005
RealNetworks’ CEO Rob Glaser grabs 3 of top 10 spots on ‘Dumbest Moments in Business 2005’ list – January 31, 2005
The de facto standard for legal digital online music files: Apple’s protected MPEG-4 Audio (.m4p) – December 15, 2004
Real’s CEO Glaser: ‘Harmony’ hack legal, Mac lovers are very sensitive to Apple criticism, and more – September 14, 2004
Analyst: Rob Glaser’s ill-advised war against Apple ‘is going to bite RealNetworks on the ass’ – August 30, 2004
RealNetwork’s CEO Glaser crashes Apple’s music party – July 30, 2004
Real CEO Glaser: Steve Jobs’ comments on Real ‘not succeeding’ are ‘ridiculously humorous’ – April 29, 2004
NY Times: Real CEO Glaser was close to having ‘iPod’ before Apple, but let it ‘slip through his fingers – April 24, 2004
Real’s CEO Glaser: Apple’s iPod/iTunes combo ‘threatens to turn off consumers’ – April 20, 2004
Jobs to Glaser: go pound sand – April 16, 2004
Real CEO Glaser begs Apple to make iPod play nice with other music services – March 24, 2004
Real CEO Glaser: ‘iTunes is only going to be used for playing songs you bought using the iTunes store – January 16, 2004
[sarcasm]Yeah, mhm sure[/sarcasm]
What a maroon!
(ain’t I a stinker?)
Apple does need to be very aware of how many companies ARE aligning themselves on the “other side” of the digital music biz with MS, and perhaps pursue more deals with others like Motorola and perhaps even start licensing their DRM if market share shoud dip just slightly.
While I love the fact that the iPod + iTines work together so well, getting more partners on board would also be a good thing to help Apple stave off Bill+everyone else.
Unfortunately the mount of money that “everyone else” can throw at this to come up with something that works as well (or close enough) is much larger than Apple can muster.
I’d hate to see Apple go from a leading position to being an also ran becuase of a lack of licensing of the DRM.
Great take MDN!
I agree with toolazytotell, Apple hast to make deals just to make Fair Play the standard in Music + DRM, everybody says that Apple doesn’t license Far Play because protect the iPod, but people will still buy iPod if the DRM is in other players or music stores because they are cool, people will still use Apple iTunes Music Store because is the bigger and easiest of all the stores. Consumers doesn’t care about the DRM behind
Usually when a ship is sinking most rats jump ship. But not Rob “Second Helping” Glaser.
“Glaser’s decision to opt for access to Microsoft services, and not just cash, might also prove astute.” – Pritchard
Uh Uh.
Wake me when any car companies make special options available for Real™ enabled mp3 players.
If Glasner was responsible to his shareholders, he would have taken all that $761 million and gone into another business sector. One where he can give them a “real” return on their investment.
That is trucklaod of money, and money is power. The power to make more money. Unless your Glasner. He’s gonna piss it up against the wall.
MDW: “Sell” as in “Shareholder should sell now”. This seems to be as good as it’s going to get folks. It’s all downhill from here.
Uhm, doesn’t this lawsuit settlement also mean that Apple can now sue MS for the same anti-competitive reasons that Real sued MS? Locking out other media software in preference of its own? Isn’t Quicktime the 3rd media software besides WM and Real’s? Wasn’t Quicktime just as disadvantage as Real, by MS’s tight bundling of WM to its OS?
Didn’t Cringely write about this lawsuit being better for Apple than for Real, over a year ago, as Apple has more to gain than Real, if Real were to win?
“Apple iPod+iTunes ‘will lose out because of the share of market forces against them'”
That’s like saying that Microsoft Windows will lose out because of the share of Linux market forces against them. A bunch of small competitors taking up a tiny fraction of the total market will only harm those small competitors, not Apple. They will only take market share from each other, and the resulting confusion may actually lead to more people purchasing iPods, as they are the safe bet.
This is of course barring the off chance that one of these companies has an epiphany and releases a product that is truly better than the iPod. And then they would have to convince the teeming masses of iTunes users to repurchase all their music to make it compatible with their player. That’s a lot of people who would have to make a significant investment to make their songs compatible with their amazing audio player.
“Microsoft takes a very wide approach to licensing its digital rights management software. It is vexing that Apple has taken a closed approach.”
Apple’s closed system is their best advantage. Millions of people are pretty much locked in to their hardware AND software. To say the the closed system is a disadvantage is ridiculous.
“That end-to-end approach to designing the customer experience can be effective early on, but over time it will lose out because of the share of market forces against them.”
Actually, the closed approach is least effective early on. To have a small portion, say 5% of the market, locked in to your product means nothing. It is only when you have a significant portion of the market locked in to your hardware, software, etc. that the closed approach works.
You buy an iPod and plug it into iTunes on your PC …. it just works. nuff said.
Current total global sales of the iPod approximately 28 million, potential projected sales for the run up to Christmas 2005 are 9 MILLION units. The iPod commands approximatley 75% of the overall global market of MP3 player sales with over 1000 3rd party ad ons from OEM car manufactures such as BMW, Toyota and Alfa Romeo and others. 3rd party manufactures such as Bose, Gucci, Prada, Burton, Altec Lansing and a whole bunch of others.
http://www.time.com/time/business/article/0,8599,1123046,00.html
Featured in Time magazine
Logitech Wireless Music System for iPod
A great way to stream music from your player to your audio system
http://www.smh.com.au/news/livewire/moveable-feast/2005/10/25/1130239525389.html
“iPod, Therefore I Am” ran the ruminative headline in an issue of Newsweek last year.
It was an important signpost that Apple’s glossy white digital jukebox for the pocket had culturally arrived.
The electronic device for iPod aficionados has become like a flame to which manufacturers have been irresistibly drawn, producing all manner of accessories and peripherals to hang off its phenomenal success.
And in turn, the availability of extras has added value to the iPod.
Today there’s an avalanche of accessories available, from wireless headphones and radio attachments to external microphones and car kits. Of them all, the compact speaker system, or docking station, is among the most practical.
A speaker dock transforms the iPod from a device used for listening on the move to a near-essential piece of home-based entertainment.
The iPod is not going to die anytime soon, Keep stuffing those donuts Rob
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quoting Rob ‘double-dip’ Glaser, from TFA: “It is vexing that Apple has taken a closed approach.”
perhaps we should start a list of other things that Rob finds vexing:
1. That men’s dress pants don’t come with elastic waists
2. That McDonald’s insists on capping its offering at Extra Large, when his shirts come in XXL, XXXL etc.
3. That consumers don’t understand that “buffering” time is a perfect time to refill your plate
did i miss any?
Isn’t Galser gross? A fat ass slob.
Nice spelling ‘E’
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Its Glaser. And yes Rob GLaser is a ‘fat ass slob’
I don’t understand MDN’s take on this article — so basically Apple’s revenues are greater than Reals? But where’s the commentary?
I mean, Dell and Microshaft have market capitalizations that far outweigh Apple, yet the smaller company is obviously kicking butt.
So, what’s the analysis of the financial numbers? Is the Real company revenue falling through the floor, bleeding cash which it will not be able to sustain? Are their company revenue charts pointing straight down and out?
???
Isn’t this kind of behavior called the “Stockholm Symdrome?”
While I support and believe most of MDN’s and their reader’s comments, I fail to see how any referrals to Glaser’s weight problem have anything to do with the topic. What he says and how he acts are all fair game, but to have to launch an attack on his appearance seems very childish. Surely you have enough ammo to support your opinions without having to resort to that, right?
Of course, the other side of that coin is that his appearance IS due to the way he acts (at KK).
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There are only two threats to Apple that I can see,
1) is to not progress on building the best portable MP3 experience (both player and client app). From all reports, the iPod + iTunes combo is at least 50%-100% better than the rivals at a similar competitive price.
2) the record industry cutting there nose off to spite their face. Should they feel that Apple’s influence is becoming too strong, they may choose to take a hit and stop supplying to Apple in order to diversify the competition.
All these anti-trust cases against Microsoft are B.S. Microsoft will eventually fall because a lack of creativity and excess flaws that plague their products, not from strategic moves like bundling pieces of like software. It’s easy to throw stones at the top, however Apple is much more drastic in this approach. They try and succeed in covering many grounds in terms of software, but since they hold a much smaller market share, nobody cares. If Apple were ever to gain a majority of the market, we could expect the same things to happen to them. The government should stay out of the economy as much as possible. The people will ultimately decide where their money is spent and which products to endorse. Any company holding power has that power because of us.
SR, if Apple would start violating anti-trust laws or using its position in the market with the iPod + iTMS to keep competitors out of the digital download market they would be to court in the blink of an eye.
Apple has 80% of the digital market share and it is not forcing anyone to use its technology nor anyone is forced to kneel down in front of Apple to ask for Fairplay license and a slice of iPod market in order to sell music downloads. The market is open and Apple is the market leader not because they are the gatekeeper but because they sell the best products.
If you win the market because your technology and products are by far the very best and the market rewards you, you are NOT a monopoly nor a case for anti-trust. It’s called open market competition.
Monopoly is when by your very presence and by your very command of the ONLY available technology of a market you prevent others from entering it or force them to pay you fee to enter the only available technology in a market. Not the case with digital downloadable music market. No one is the sole owner of the only possible technology.
Conclusion: Apple could grow to 99.9% of the market and not be case for an anti-trust lawsuit.
What is so open about Media Player ? You have to pay MS if you want to use the DRM. Apple chooses not to sell DRM right now. Big deal. I don’t see auto companys like GM crying about not having access to Porsche Engines. They compete in “their” market with “their own” product. Only in Tech do you see the lazy cry about not being able to “use” someone elses hard work to prop up their pile of stool product – by association. Too many useless dorks have made millions this way. Namely MS by “Riding the Bear” – IBM – for 15 years…only to emerge as the overall winner. Who ever bought a PC for Windows ? All they wanted was a cheap PC.
As a consumer I want a product to work as advertised. At a reasonable price. iTunes + iPod do that and more !! Nobody wants Glasers “closed” product that does not support the MAC. LOL !!! 2 can play at that game.
Apple & Google right now…along with Open Source Linux stuff…create much fear for MS. They can smell the scent of many consumers realizing that they do not need MS for anything. MS is lacking a cool factor that it had 12 years ago. Dangerous times for them indeed.
Every iPod sold is a potential person who finally says “…whoa this works and is cool, I thought the IT guy at work said that Apple sucked”
Smell the fear at Real and MS.
Apples been on top for 5 years. When is this ‘lose out’ supposed to happen?
It’s like Steve says “consumers have plenty of choices, but some people just like the choices they are making”.
Noone forces anyone to buy an iPod, and noone forces anyone to get their legal downloads from iTunes.
You can choose Apple or you can choose the hundreds of alternatives. If you choose Apple, their hardwareb and software works on both Mac and PC. If you choose any of the competition, you MUST use a PC, directly discriminating againts a minority group.
In this environment of massive choice, people choose Apple in overwhelming numbers. Why? Because monopolistic behaviour forced them to buy Apple? No, because they chose to buy Apple.
It doesn’t matter how big Apple get, they are not guilty of monopolistic behaviour, and they have created no barriers to entry to competitors inton the industry. I’m sooooo sick of hearing this uninformed, uneducated nonesense to the contrary!!!
Sorry about the typo:
“Consumers have plenty of choices, but some people DON”T like the choices they are making”.