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SEATTLE--Whenever Rob Glaser needs to blow off steam, he descends to a two-lane bowling alley in the basement of RealNetworks' headquarters here.

It is a fitting retreat for the driven chief executive, who finds himself increasingly defending his company in bunker-like pitched battles against the vast empire of Microsoft based just outside town. Although RealNetworks popularized Web audio and video technologies years before others were paying attention, Glaser knows that such an "early mover" advantage isn't worth much once the Microsoft juggernaut gets rolling.

"Microsoft may not always be the best 'version one' company out there," the 40-year-old CEO said in a recent interview with CNET News.com. "But it brings a tremendous persistence and follow-through and discipline to the process."

This persistence has put Glaser in an adapt-or-die situation that forces him to keep one step ahead of Microsoft to avoid being crushed like so many other challengers. As a result, to avoid competing directly with Microsoft, he is creating a hybrid company that embraces aspects of both the media and the software business.

But that strategy carries an inherent risk: As RealNetworks continually evolves to stay beyond Microsoft's reach, it could get too far ahead of the curve and miss establishing its products and services in the marketplace just when mainstream consumers are beginning to accept Internet multimedia technologies.

"Real is going in two directions at once," said Will Poole, vice president of Microsoft's Windows Digital Media Division. "What we've been seeing is that Real is having a challenging time keeping up with the pace of demands from customers."

Although that opinion comes from the company's chief antagonist, others agree that RealNetworks is losing ground in basic multimedia technology as it concentrates on becoming the online analogue of a cable TV network. However, RealNetworks may face even more peril by stopping to take on the software giant--a fatal mistake that Glaser saw all too many companies make during the 10 years he himself worked at Microsoft after graduating from Yale in 1983.

The ambitious, young executive worked his way up through the ranks to become vice president of the multimedia systems group before leaving his mentor Bill Gates to found what was originally called Progressive Networks. In many ways, he has been running from Microsoft ever since.

To be sure, Glaser and his company are true pioneers of high technology, having the foresight and successful execution that have made RealNetworks a fixture of the Internet. But if there is one defining characteristic that drives Glaser--personally as well as professionally, some would say--it is a near-obsession with Microsoft.

Looking out from his office on a clear day, Glaser can see snow-capped mountains towering in the distance, as Puget Sound ferries busily haul commuters back and forth. In the rare moments when he has time to take a breath, he sometimes reflects on the long journey he has made from his old neighborhood in Yonkers, N.Y.

As a self-described "progressive" political activist in college, he didn't seem an obvious candidate for the corporate jungle: As Glaser pondered joining Microsoft at the first fork in his career path, the other tine led to a life in nonprofits. But he grew up in the decade he spent at company headquarters in Redmond, Wash., learning the software business at the hand of Bill Gates and alongside now-Microsoft CEO Steve Ballmer.

Leaving the company was something like leaving home for Glaser, who had recently turned 30. "The true north I wanted to follow was 60 or 90 degrees different than the true north that Bill or Steve were focused on," Glaser recalled.

As he sought to establish his independence, however, Glaser remained keenly aware of his corporate alma mater's penchant for eating its young once they've left the nest. As a result, he has looked from the beginning for a foothold in the media business as a way of avoiding head-on competition with Microsoft.
 

So Glaser kept running, morphing RealNetworks into a network that distributes entertainment programming, as well as making the software used to download it.

"Most businesses that just focused on one way of making revenue find the current environment exceedingly challenging," he said. "(We'll succeed) whether we make our money principally selling pickaxes to a gold rush, or selling gold ingots to consumers."

That may be wishful thinking, but there is no denying that the Internet multimedia business Glaser helped spark is changing. For years, Net audio and video remained low-quality and free, but major media companies like AOL Time Warner, Bertelsmann and Vivendi Universal are finally starting to charge for their audio and video content online. By those companies' standards, RealNetworks is tiny.

Glaser believes he can thread his way between the media and software giants, taking just enough from each side to survive. At the same time, he's hoping that lingering fear of Microsoft will persuade big media companies to align with RealNetworks.

His direction jibes with the post-Napster desire of media companies to sell secure access to high-quality digital music, movies and other forms of entertainment online. They need a way to get online content to customers without letting it be pirated and distributed illegally. It was perfect timing for RealNetworks, which offers that and more--for a price.

"There had to be some kind of battering ram, some kind of galvanizing force, that would cause the record companies to realize they couldn't resist the technology," Glaser said.

In practice, however, the strategy faces two major uncertainties: Consumers have to prove they're willing to pay for online content, and RealNetworks' software must hang on to its popularity in the face of Microsoft's ubiquity.

Even though more than 25 million people use RealNetworks' software at home, according to Jupiter Media Metrix, the company's early lead among consumers has eroded. Some recent research also shows that RealNetworks and Microsoft are about even in the use of their software.

The company is in relatively good financial shape to sustain it for the time being, having posted small but consistent pro forma operating profits in recent quarters. Last September, RealNetworks had more than $348 million in cash on hand, enough to last years into the future at its current burn rate, or the rate at which it spends cash reserves.

A more pressing question involving RealNetworks' fate is its ability to strike partnerships and balance allegiances with major media companies. Key to that success will be Glaser's ability to play a diplomatic role alongside his visionary one, a feat that has proven difficult in the past.

Glaser's fascination with media runs as deep as his interest in technology; even as a teenager he tried to seed new networks, creating a radio station broadcasting over his high school building's wiring. And the devoted Seattle Mariners fan is dedicated to sports and music, two of the most consistent programming options on the RealNetworks software.

But a politician Glaser is not: He is wholly type A, his stocky frame barely containing a fierce, competitive intensity that extends from the boardroom to the professional bowling league that he partly owns. That intensity has been known to backfire in his management style, which departed executives say offers little room for debate or disagreement.

"His greatest strength is his intellect, not his operational skills or his management skills," said one former executive who asked to remain unidentified. "That has been the principal reason for the high executive turnover."

Glaser has run into problems outside the company as well. As acting CEO of MusicNet, he spearheaded a deal with Napster last summer that the heads of the major record labels knew little about until it was announced. Privately, label executives complain bitterly about this deal, saying Glaser soured relationships with AOL and the other record labels.

"Rob's a bull in the china shop," said one senior record-label executive associated with MusicNet. "He violated our contract...He really screwed up."

Still, Glaser can be persuasive as well as abrasive. Even as Microsoft began putting more muscle behind its own multimedia ambitions, Glaser's peripatetic lobbying last year helped cement a partnership with MusicNet through which AOL Time Warner, Bertelsmann and EMI are offering high-quality songs for a monthly subscription fee. The other major labels have a similar plan but use Microsoft technology.
 

In addition to making such deals, Glaser is no stranger to corporate politics--and that includes pitting major players against each other if he can benefit from the conflict. AOL's rivalry with Microsoft, for example, has made it one of RealNetworks' strongest allies in an online media landscape that is as complicated as a World War I map.

AOL and RealNetworks "have struck relationships at multiple levels," said Larry Gerbrandt, a senior analyst with media research firm Paul Kagen Associates. "I don't see AOL making peace with Microsoft anytime soon."

While Glaser himself downplays the importance of the AOL alliance, he does say the other giants are loath to let Microsoft gain too much power. Allying with RealNetworks is safer and serves other companies' interests better in the long run, he says.

"They all share a common belief that they don't want any single company to be the vacuum cleaner that vacuums up all value," Glaser said in a not-so-veiled allusion to Microsoft.

But corporate loyalties are notoriously shallow, and RealNetworks has yet to prove that it is a necessary partner for the future of online media or a convenient ally that serves a limited purpose in a larger conflict.

In the long run for Glaser, that challenge may be tantamount to a 7-10 split.
 

Seventh profile: John Chambers