Apple 'Stunned' by RealNetworks IPod Move

Reuters ^ | July 29, 2004

[Leroy S. Mort]

SAN FRANCISCO (Reuters) - Apple Computer Inc. is unhappy with RealNetworks Inc.'s move this week to make its RealPlayer music service compatible with Apple's market-leading iPod digital music player and may take legal action to counter it, the company said on Thursday.

Apple (AAPL.O) said in a statement it is "stunned that RealNetworks (RNWK.O) has adopted the tactics and ethics of a hacker to break into the iPod," adding: "We are investigating the (legal) implications."

Apple said once its iPod software is updated it is "highly likely" that RealNetworks files "will cease to work with current and future iPods."

Earlier this week, Seattle-based RealNetworks started offering a test version of its latest media player, RealPlayer 10.5, that allows people to transfer songs purchased on the RealPlayer Music Store service to Apple's iPod.

Real was quick to defend its Harmony digital rights management (DRM) software, which makes the RealPlayer-iPod transfer possible.

"Consumers, and not Apple, should be the ones choosing what music goes on their iPod," the company said in a statement.

"Harmony follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility."

Real has said its new software makes the DRM technology that protects its songs compatible with Apple's own DRM standard, known as FairPlay.

Apple has aggressively fought against software developers who develop ways to get around the FairPlay protections, which regulate where and how files downloaded from the iTunes Music Store can be played.

Analysts were relatively unconcerned about the legal implications for Real, which so far has released the new "Harmony" software on a limited test basis.

To date, Apple has sold more than 4 million iPods, which now account for about 12 percent of its revenue. More than 100 million songs have been downloaded from its online music store.

For Cupertino, California-based Apple, the iPod operation "is the most important division because of its visibility and high growth," said Michelle Gutierrez, analyst with Schwab SoundView Capital Markets.

But, Gutierrez said, RealNetworks' software should not have an impact on Apple.

"This is not really material at this point," she said. "It hasn't been proven that RealNetworks provides a benefit. Their songs are not cheaper (and) they don't have a broader selection."

[Leroy S. Mort]

"We're just stunned that someone figured out how to sell their music to play on OUR hardware". How very Apple-onian.

I feel the same way about this that I did about the Iran-Iraq war. This is two leftist-supporting companies duking it out. May there be many casualties and much loss of resources on Both sides.

[Hank Rearden]

"We love our 3% market share, and nobody will be allowed to make it bigger!"

Dorks.

[rintense]

I'd be suspect of the company that basically originated spyware too.

[Glenn]

May there be many casualties and much loss of resources on Both sides.

Perhaps you should go into competition with them. Surely someone with conservative leanings could put them both under in no time.

[krb]

I thought iPods played MP3 files. Someone please explain to me what the heck is going on.

[js1138]

I think Apple has more to fear from Apple Records. Twelve percent of their revenue from a market they agreed not to be in.

[Lost Highway]

"We love our 3% market share, and nobody will be allowed to make it bigger!"

Isn't that their official mission statement? It amazes me that they would rather have 3% market share just so they can feel superior.

[ThinkDifferent]

I don't like Real, but I see no problem with what they did here. Reverse engineering is perfectly legitimate.

[blanknoone]

RealNetworks Stuned Apple's Beeber.

[Leroy S. Mort]

I have a RIO MP3 player that plays CDRW disks. Cost me $49.99 and plays every bit as good as an iPawd at 5 times the price. Plus I don't have to think about Steve Jobs backhanding the mark-up on his little art museum piece to the Kerry campaign. Think Different.....

[Petronski]

After leaving Congress in 1995, [Washington Senator] Maria [Cantwell] joined a software start-up in Seattle. As Senior Vice President of Consumer Products at RealNetworks, she helped create 1,000 jobs in Washington state.

[Izzy Dunne]

Reverse engineering is perfectly legitimate.

Perhaps you should take another look at the DMCA laws. I think you're mistaken.

[Petronski]

RealNetworks Stuned Apple's Beeber.

I was just about to post that. LOL

[Not A Snowbird]

I knew a stuned beeber would work it's way into this thread... top 10!

[Petronski]

The DMCA bars reverse-engineering of cryptography.

[Theo]

Apple's music products (iPod and iTunes) are quite a bit above 3% of their respective markets. Estimates are that iPods account for 10-25% of the portable MP3 market, and iTunes accounts for 70% of the online music download market.

About 4% of personal computers are Apple brand. You'll notice if you look closely that most of those who make money from music and video use Macs.

[Hank Rearden]

If they think they're stunned now, just wait until Janus drops a nuke on their 'Pod this fall. They're going to wet themselves.

[N3WBI3]

Apple said once its iPod software is updated it is "highly likely" that RealNetworks files "will cease to work with current and future iPods."

This will keep apple in the 3 percent area, they were hoping to use iPods as a push off point for their other products (integration). Sadly this will be declared a violation of the DRM (or should be they way it has been applied).

[avg_freeper]

I'm saving up for my iBeeber.

[Hank Rearden]

Watch and see what Janus does to those wispy-goateed Kerry voters at Apple.