
Has Real adopted the "tactics and ethics of a hacker," as Apple puts it, or has the Mac maker taken a page from its nemesis Microsoft in strong-arming the competition, as some industry analysts suggest? Both? Give us your take.
July 30, 2004
Music downloads have begun to put their renegade origins in the past. Internet song sales could reach $270 million, more than double the takings from the previous year, according to one new report, rising to $1.7 billion by 2009. More than any other company, Apple Computer is poised to cash in on that trend.
With success comes envy. RealNetworks, a digital media pioneer, has struggled to find its way in the music distribution business. First, it battled Microsoft over dominance in digital streaming formats. Now it's facing off with Apple over interoperability between its own music format and the iPod. Will the strategy work?
Apple has sold more than 3 million iPods, taking about 25 percent of the global market for digital music players by some counts, and the company claims its iTunes Music Store accounts for some 70 percent of all songs bought online. But can Apple stay on top in the face of renewed competition from Microsoft, Sony and others?
Looking for a digital music standard? How about MP3s? Still the dominant format, MP3s are falling out of favor with some listeners who say they've found better compression technology elsewhere. Major format battles still loom for the industry, offering a major opportunity to the company whose technology comes out on top.
As giant corporations fight for dominance, they may wind up the biggest losers. Standardization efforts are progressing slowly, and if history is any guide, don't expect results soon. The top problem: establishing copy protection technology that works everywhere. 
Apple's musical iPod unveiled
Apple unveils its first consumer digital device, the stainless-steel iPod, capable of storing up to 1,000 songs on its hard drive.
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Gadgets in tune at Macworld
New gadgets and software for the Mac were on hand at Macworld 2004 in Boston. ZDNet's David Berlind uncovers the latest, including full-circle iPod speaker systems, software for budding rock stars and the ultimate mobile multimedia editing suite for the video pro on the go.
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Real changes course with open source
RealNetworks CEO Rob Glaser sits down for a Face to Face interview with CNET editors. In this 20-minute conversation, Glaser talks about his company's new open-source strategy and shares his views on MPEG-4 adoption and digital rights management.
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Real announces Helix media player project
At the LinuxWorld conference in San Francisco, CNET's Brian Cooley talks with the general manager of RealNetworks' Helix technology, Kevin Foreman, about a new open-source program that's aimed at creating a media player for Linux.
![]()

Apple launches iTunes Music Store and new iPods
Apple CEO Steve Jobs announced on Monday the launch of a new online music store that features 99 cent downloads and a 200,000-song library. He also introduced three new iPods, one which has 30 gigs of storage.
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-Until Apple starts locking their customers into a proprietary system that is the defacto standard...oops FairPlay isn't the standard nor is anything else. In fact they aren't even trying to make FairPlay a standard. They aren controlling their property. Boo Hoo.
-Until Apple starts playing slime ball BS tactics...hmmm not yet.
People are just pissed that Apple has finally top dog in one market and its eating you guys alive. FACT: If you don't like Apple or the iPod go with Napster or MusicMatch. Finally Apple is in the drivers seat and everyone is currently relegated to the bottom of the totem poll so deal with it and stop ********.
By not taking advantage of their lead, Apple is going to doom itself to irrelevance yet again, just like they did with the Mac. They didn't want to license, they wanted to control both the hardware and the software. Where did that get them? 3-5% of the market share, that's where.
It's true they are the early leader, but what happens when everyone's fascination with the over-priced iPod wears off? Let's face it, as cool as it is, the iPod is a fad. People eventually aren't going to care what the player is, as long as it's easy to use with the features they want. People care about their music, not so much what it's playing on. And really, all iTunes is, is a method to drive iPod sales. When the iPod killer comes along, and it will, where does that leave Apple?
It's really a shame, because Apple over the years has built some really great stuff. And you have to give them, and Steve Jobs, credit in this case for forcing the industry to warm up to the idea of online distribution. But by wanting to be like the Microsoft monopoly, (as much as Apple denies it), they're relagating themselves to also-rans. The days of controlling the hardware and software are long gone, if they ever even existed at all. Wake up, Apple! You can use the lead you have to become the standard, or you can stubbornly refuse to acknowledge reality and sit and watch your competition leave you behind, AGAIN.
[[http://By not taking advantage of their lead, Apple is going to doom itself to irrelevance yet again, just like they did with the Mac. They didn't want to license, they wanted to control both the hardware and the software. Where did that get them? 3-5% of the market share, that's where.]|http://By not taking advantage of their lead, Apple is going to doom itself to irrelevance yet again, just like they did with the Mac. They didn't want to license, they wanted to control both the hardware and the software. Where did that get them? 3-5% of the market share, that's where.]]
You are talking about the total Mac market, not the Digital Music market in which the question was referring to. Apple owns 50% of the player market and 70% of the legal download market. Not too bad considering it's one of the hottest markets right now.
As far as calling the iPod a 'fad', is just blind. The iPod rules because it's the easiest player to use. Plus a tightly integrated free music player to manage and copy songs with. Top all that with wicked cool looking player with a sweet design, and you have the best selling player on the market.
Your statement about Apple not adhering to standards is a joke. Just because they are not willing to let everyone sell iPod compatible songs does not make them a monopoly.
But! I don't agree with Real's tactics. Obviously Apple is going to license fairplay to other devices (a la Motorola). There's no reason for them to undercut themselves so early in the online music distribution business. It's far to early to say which services are going to work and which are going to fail. I personally don't see Real's online music store succeeding. Why would Apple want to license Fairplay to a losing horse? Let the online distribution game shake out and then license accordingly.
It just too damn soon for anyone to be drawing any conclusions about this business. People want to spot the next big thing but the truth is that this is going to take time to sort out. Apple is on top for now. But they are hardly the Microsoft of anything.
Simple psychology tells you that people like under-dogs. Microsoft is on top of pretty much everything and it's human nature to bash the big guy, no matter whether it's actually logical or not.
Every major company, and I mean EVERY company, would like to crush their competitors and steal their business. Welcome to capialism. Apple is no different and Apple is not some special breed of altruistic company. Apple would love to keep Real out of their business if they can. The fact that Microsoft is one of the few companies who actually has the resources to run other companies out of their market creates a lot of sour grapes, whether valid or not.
Apple proponents should look at history if they want to see how the iPod battle will shape up.
First to market at an expensive price point
+ Dependance on proprietary technologies
+ Isolationist tendancies toward other vendors
= obsolescence and a tiny rabid fan base
(If you don't believe me, read up on the Newton which I still think beats the hell out of Palm machines, but who cares when the Newton's dead and PocketPCs are pretty darn cool?)
It's history all over again, and it has very little to do with Microsoft. I'm sure people will be writing rants for years about how much better the iPod was than the flood of cheaper knock-offs and how Apple had it right first.
But when it doesn't play WMAs, or OGG, or Real, or any other new format that comes along... And when it costs 1/3 more than products from other vendors with comparable specs... the writing is on the wall for a repeat of history.
Rant all you want. Apple's "ease of use" and "elegance" will be copied, their reliance on proprietary technology will price them out of the mainstream market, and their incompatibilities will seal their fate to another 5% market share over the long haul.
Will it be the end of Apple as a company? Highly doubtful, and who wants that anyway? Apple makes great products and pushes the rest of the market to do better. But they'll never be more than a medium to small sized fish in a big ocean, and (here's the kicker) THAT'S THE WAY THEY NEED IT TO BE.
Who would evangelize Apple and it's products if it were a huge market-leading company like Microsoft? Who would run around chat boards declaring Apple's virtues to the world? Who would bemoan Apple's lack of respect in the marketplace as shown by their "superior products" but inferior market share? Who would pander to Steve Job's whiney, self-inflated arrogance? The fact of the matter is that Apple needs to stay a bit player to stay important. They would loose their identity and their fan-boys would defect to Linux or some other "David" if they became "Goliath". Their fans would jump ship because it wouldn't be nearly as satisfying to cheer for them if they became the McDonalds of the technology world and every device you owned had a stupid i prefix on it's name. (iToaster or iBlender anyone?)
So why doesn't everyone stop whining? If you love Apple as much as air and want to spend your money on an iPod, fine. Your neighbor will buy a Dell (or a Samsung or any one of the other bazillion vendors' products )because first and foremost he likes a deal, and he'll have a pretty decent product that meets his needs at half the price. It may not be as "cool" or as "elegant" as an iPod, but who the hell cares? The iPod fad will die eventually and in the meantime he's got kids to feed. If nothing else he can spend the savings on building his music library (probably in a format that will play on other devices too). After all, who makes the device is a non-issue for the majority of users because the music itself is the real point of having these devices.
WMA/ACC format that Apple has 70% of the market. Majority
Rules.
I don't see Apple in the music business forever, but should make their name while they can.
Apple certainly wasn't first in door in the mp3 download business, but Apple became the most popular by 1)creating an easy to use software interface (iTunes)for creating and managing music files, 2)creating and selling easy to use, attractive lightweight hardware(iPod) that enables user to bring an entire music collection and then some on the go, and 3)having a large catalogue of licensed popular tunes to sell at its disposal at an affordable price. Then Apple makes Bill Gates and Steve Balmer really fume by making this technology availble for Windows users! Apple being Apple, of course creates a fun piece of hardware that is only compatible with its own music file technology and nobody else's. Everytime you buy an mp3 from iTunes and download onto an iPod, you're contributing more to Apple's revenue stream.
Real Networks comes along and reverse engineers the technology to enable music files from its own Rhapsody music service to be able to be saved and be playable on the iPod (not only pissing off Steve Jobs, but Bill Gates and Steve Ballmer, too, because Microft didn't either think of it first or didn't get the product ready yet and out the gate before Real, its other mortal enemy in this market). Apple gets wicked mad because every Real music file on an iPod is revenue denied to Apple and claims Real must be infringing on its monopoly, er, ah, excuse me, intellectual property because they discovered how to make their product compatible with Apple's hardware.
For a start, Apple has nothing to fear because iTunes is still easier to use than Rhapsody and both have virtually the same music available. Rhapsody would have to compete with iTunes on ease of use, selection and price. For the time being, Real's little hack just made it possible for its customer base, whatever pitible size compared to iTunes customer base, to transfer their files to an iPod and have a 'real' cool music player to sture their tunes.
The next problem is going to be what big bad Microsoft comes out with next year. It may be a total proprietary system with some electronic entertainment partners or like Real Networks, they will rework their own Windows Media Audio or perhaps create something else, so it works in the iPod. Chances are, whatever it is, it will suck big time right out the gate and fall flat on its ass (track record shows this is not unusual for them). But if they stick with it, the Microsoft version will either improve and steal revenue from Apple big time or continue to suck and be a drain on Microsoft's resources and revenue.
It means that the ENTIRE market is YOURS, through means legal (like the RIAA and MPAA, disfunctional and getting worse US Patent Office,) and illegal (like Microsoft and the Mob, who aren't as successful as the former in keeping away competition despite their use of deadly force.)
technologies either.
To quote:
"Everyone takes shots at MSFT for being a monopoly, but Apple has always been a monopoly since the introduction of the Mac. Except for nineteen months back in the nineties, no one else is licensed to manufacture and sell Apple technology.That always has been because Apple is essentially a hardware company, it makes money by selling hardware and doesn't know how to make money any other way. Then music file sharing came along, mp3 players and Apple took notice."
Please.
Apple is a monopoly because only they sell Macs?
Is BMW a monopoly because only they sell BMWs? No! A BMW is a car, and they're not the only car manufacturer. A Mac is a computer, and they're not the only computer manufacturer. Think!
IBM makes G5's and G3's, Motorola makes G4's. IBM makes the hard drives. ATi and NVidia make the graphics cards. The ONLY THING that is different about a Mac is that it uses a PowerPC processor instead of x86. And of course, Mac OS X only runs on PPC, just like Windows only runs on x86.
Do people call Sun a monopolist because only they sell Sun systems?
And notice: You say "Apple is a hardware company". Well, guess what, Dell is a hardware company, and only Dell makes Dell computers...just the same way only Apple makes Apple computers! DUH!
To quote:"Apple certainly wasn't first in door in the mp3 download business, but Apple became the most popular by 1)creating an easy to use software interface (iTunes)for creating and managing music files, 2)creating and selling easy to use, attractive lightweight hardware(iPod) that enables user to bring an entire music collection and then some on the go, and 3)having a large catalogue of licensed popular tunes to sell at its disposal at an affordable price. Then Apple makes Bill Gates and Steve Balmer really fume by making this technology availble for Windows users! Apple being Apple, of course creates a fun piece of hardware that is only compatible with its own music file technology and nobody else's. Everytime you buy an mp3 from iTunes and download onto an iPod, you're contributing more to Apple's revenue stream."
ROFL you have never touched an iPod OR iTunes, have you. You must be absolutely blind to the world. I'm specifically referring to this sentence: "Apple being Apple, of course creates a fun piece of hardware that is only compatible with its own music file technology and nobody else's."
LOL!!!
Consider. iPods play MP3's, AAC's (BTW, Apple's AAC format...is made by Dolby Digital, not Apple...so it's not proprietary!), WAV, and all the other major formats except Microsoft's proprietary WMA (since they'd otherwise have to pay Microsoft WMA licensing fees).
However, iTunes converts WMAs to AAC so you can play them. You can also burn AAC's to a CD in MP3 format in one click.
iPods play all the major music formats, not just Apple's own format! I get very annoyed when people say idiotic things like this.
Apple technology doesn't spread viruses, cause upgrade jitters,
or cost a bazillion dollars to license, or promise stuff that it
doesn't deliver and probably never will.
Apple technology just works. How very un_Microsoft can you
get?
Off the soap box and going to bed now.....
Let Apple do the same - enjoy the lead they have created for a few years, then if it hasnt led to better products and offerings from other companies then make them charge companies to gain access to the goods. Its got to be on Apple's Terms. If you force any company too early they are going to make sure that you pay - making their products not work with yours or charging you so much you cant afford to gain access to the goods.
If you open it up directly now before the market has not been established well then you are going to have many crapy programs out there and the customers will be turned off and the market might be become what it might have been. Case in point - look at how Microsoft has licensed its DRM software to everyone under the sun - you think they did that because they are nice people - no, they did that because it gives them a foot hold in a market where they have none.
And look at the products that use that technology - has anyone really had some kind of success. That On2 company or whatever its called over in England had online music downloads for over a year using MS DRM software - they have 1-3 hunderd thousand songs downloaded - Apple comes in and they get 3-5 hunderd thousand songs in the FIRST WEEK.
Look at the car industry - Ford made the first car, compition has drivin that industry to downsize the different companies and its become a very competive market with more inovation coming out of these companies each day - it works this way, just leave well enough alone until it becomes a problem and when companies try to compete in an established market the controling company does things that are illegal - ala M$...
Off the soap box and going to bed now.....
Again, its all about their products & not US !!!
Take note consumers !
competition by buying up other music systems like
Microsoft buys up companies with good products just to
kill them because they are competing with an inferior
Microsoft product.
Besides, Apple doesn't suck nearly as much as Microsoft
does.
They don't! Why? Consumers... both Business & Private Consumer base, look to their bottom line. A PowerMac G5 with 20" Apple LCD screen costs about $4000-$5000. With 95% of businesses running MS Word, Excel, etc. That's another problem for Apple. The i86 based hardware systems are cheap & the top O.S.'s are costly. When it comes to market price competition, Apple SUCKS!
True, when people say things like Microsoft sucks, ya, maybe, but remember that software is their bread & butter, NOT hardware! I'm not impressed with MS Windows' flaws either, but if I have to pay 2 - 3 times the price for a computer just for good software, it's just not worth my time... or money.
That's what it boils down to. Your investment, coupled with compatability, interoperability & low cost. Neither one is a sticking point for Apple. Look on E-Bay. Almost 800 pre-owned Apples, & only about 10% are able to run the latest OS X Panther. Does Apple still support the older MAC's? No! Now, if you buy an Apple, you've got to buy extra service & warranty protection. Even Dell does better in this area! With OS X v.4 {Tiger} coming out, will more older G3/G4 systems be made obsolete?
Apple needs a reality check & quick! They need to lower their prices to clone shop competition. Apple needs to stop changing the look of their systems, & concentrate on the one thing they need the most...customers. The G5 Power Mac is beautiful, but so is a Rolls Royce. Not everyone can afford that Rolls, but more people can afford a VW.
Remember also, that Linux is coming to the forefront. It runs on x86 clones, & Macs. Hey, Apple, Why not an OS X version for Intels & AMDs?
If people think that Apple will get out of the personal computer business any time soon...,
think again. I-pod is nice, but there are other players out there, wanting to get your business.
If Apple got rid of the 'tude on price, kept a hardware version that would be around more than a year or two, & that was inter-compatible, then maybe...just maybe they would be at the front desk of businesses instead of Dell or IBM...not just in the Hollywood visio-graphics drafting rooms!
"innocent little Microsoft" peek at their MacOs.
sitting on HUGE profit margins and plenty of money in the bank.
They have said they don't want to compete with MS and DELL.
They have and will continue to cultivate an "exclusive" status.
They don't want to be FORD, they want to be Mercedes or Lexus.
Apple has been on the forefront of many technological
advancements lately, digital music being only one of them.
Apple will continue to focus on producing the most
technologically advanced product on the market place in
conjunction with their "exclusive" motif. Apples loyal fan base
has kept them in business and they will continue to cater to that
base If they convert some more with iPod and iTunes, great.
Apple will not license its FairPlay DRM. They are too concerned
about the entire product-how software and hardware interact.
Someone will come out with an MP3 player that will be cheaper
and maybe be superior, but it won't bother Apple. Then more
pundits will predict Apple's downfall, but they will survive.
other suckers out of it, it works because apple keeps full control
to make sure everything works for consumers like me and there
is nothing like it elsewhere. Even if they are a monopoly so what
they lead they don't steal ideas from anybody, everybody is
behind because they have no vision no logic no consumers
needs in mind.
Has Apple ever bought out or tried to crush their competition?
Has Apple ever been convicted of being a monopolist? Has Apple
ever done anything to stifle a competitor from offering the same
products and services as they do, or to hamper a competitor
from bringing a product or service to market?
No, the simple fact is that Apple has a dominate position in the
digital music market because they offer a product, the iPod, and
a service, the iTunes Music Store, that are far superior and a
must have for consumers. Beating your competition by building
a better product and offering superior service should be
applauded. And it's the complete opposite of Microsoft's way of
doing business.
>>yes, they bought out most of the top DCC tools in order to dominate the editing and effects business and have crushed support for othjer platforms - including Shake, FCP, Logic Audio, Chaile, etc
Has Apple ever been convicted of being a monopolist? Has Apple ever done anything to stifle a competitor from offering the same products and services as they do, or to hamper a competitor
from bringing a product or service to market?
>> yes, while they are using open source products to build OsX they are downrright rude to open source developers, in fact they take moves to make sure we cant compete with them - so they can build their monopoly
unlawful business practices, and aren't capable of innovation.
That's not Apple!
non-invasive, non-spyware-installing, non-adware-installing
pieces of hardware and sofware that inspire great loyalty with
users. Unlike *everything* Real has ever done, and *most* things
Microsoft has done.
I'm not going to stop using the superior music hardware and
software Apple just because it's in a dominant market position.
I use "PC" computers for a simple reason. Options. I like the fact I can use any kind of hardware and/or software. I like the fact I can run all the new software on even windows 95 and vise versa. I enjoy having options, not having to feel like a sheep in a flock of drones. I like options therefore I do Windows.
'elistism'.
bunch. We tend to love our computers. If we get preachy, it's
because it is difficult to understand why so many people will put
up with the crap they go through in Windows when life on the
Mac side is much more pleasant (I've used both extensively).
Sheep in a flock of drones? There is nothing more dronelike
than the masses who buy Windows machines without even being
aware that there are alternative operating systems. Then,
there's the PC drones of another kind: all those Windows
machines out there that have been hacked into due to awful
security and turned into spambots unbeknownst to their owners.
As for choice, sure you can choose between multiple OEMs, but
only a few of them are any good. Besides, one of the reasons
why Macs work so well is that Apple designs both the OS and the
box. Windows is unwieldy in part because so many different
components have to be supported. On the Mac, there is plenty
of choice when it comes to adding third party hardware, and
adding hardware is usually a breeze.
With respect to software, there is no lack of choice on the Mac,
unless you want games. Sure, there may be three or four
programs for some purpose rather than ten, but most of the ten
aren't worth the time.
Windows users have no options. MS actively works to eliminate
your options.
Word processors - you could run Word or.....
Web Browsers - you can use Explorer or ....
Mail clients - there's Outlook or.....
Question for you to ponder - how much software on your box
was built by someone who is not MS?
Choices indeed.
>>yes, they bought out most of the top DCC tools in order to dominate the editing and effects business and have crushed support for othjer platforms - including Shake, FCP, Logic Audio, Chaile, etc"
They were NOT competition to Apple since Apple had no such products to begin with. They baught them to get a head start in the business, not for the sake of crushing them out of existence like Microsoft does.
"Has Apple ever been convicted of being a monopolist? Has Apple ever done anything to stifle a competitor from offering the same products and services as they do, or to hamper a competitor
from bringing a product or service to market?
>> yes, while they are using open source products to build OsX they are downrright rude to open source developers, in fact they take moves to make sure we cant compete with them - so they can build their monopoly"
Give an example please. As far as I know Apple release every update they make to OS X core in the form of Darwin. The Gui is what they keep to themself, and that they developed themself.
hardware, software, etc. from concept to finished product. Apple
deserves to reap the benefits of its labors without having
someone else nose in on their work. Seems like they're all poor
loosers and show themselves to be unable to create their own
venue instead of trying to push in on someone else. minutes ago
they were all rubbing their hands gleefully thinking Apple was
dead. Well bravo for Apple. Let them all eat cake!
Had to comment this since the "chart" (haha) is obviously made in 5 minutes from two bits of data :1
<a class="jive-link-external" href="http://yahoo.businessweek.com/technology/content/jul2004/tc20040727_6351_tc120.htm" target="_newWindow">http://yahoo.businessweek.com/technology/content/jul2004/tc20040727_6351_tc120.htm</a>
For some reason, CNET is biased against Apple. By ripping off Apple rather than innovating, it is Real that is acting like Microsoft. What Real is doing is akin to some upstart cellular company producing a phone that taps into Verizon coverage rather than developing a cellular network of their own. Real needs to get a corporate life and actually create something valuable of its own.
totally proprietary software, much of which doesn't work on the
Mac, all of a sudden wants to "give people choice" in which
music store they use? I don't think so.
Real has been suffering for a while and this is an attempt to
regain relevance after Apple did such a great job in a market
Real has tried but failed in.
Apple has already shown they are willing to partner with
*serious* contenders, such as Motorola. I'll bet they do so with
other companies that can offer Apple something as well; Real
clearly has nothing to offer, but everything to gain.
To me, it's just another program and it's extensions. It's all digital, and they are all pretty much equall in quality.
And, in the Apple world, when you download files from the Apple Music Store via iTunes, you can cut a regular CD from it, then cut or convert that to anything you want.
The issue is not Apple, but the fact the REAL is using their own DRM and it's probably something that is not so flexible. It's probably something designed for windows even. If they allow you to create a CD or convert what you download from them, removing their DRM, it wouldn't be a problem to rip it to MP3 to play on an iPod. It's REAL's more restrictive DRM that appears to be the problem, or there wouldn't be a need to do something like this.
And why should Apple share. They are by far the leader, and the whole point is to use their technology. They same people complaining are the same ones that thinks it's okay when MS does something because they rule. They thought it was okay when MS was making deals with various Music companies and movie studios to use their DRM that was very restrictive and would have left non-MS people (Macs and Linux) out in the cold. Well, for once the shoe is on the other foot, and still Apple is being far nicer about it. They are concerned with "Fair Use" which is why their DRM is called that, not the Draconian methods MS uses.
However, if a company does it, it's okay, and some even defend them!!!
That's rather amazing.
I guess corporations like REAL can do what ever they want.
CD, then convert it to mp3. other services don't let you convert
it to the mp3 format, so really, it's the other services own fault.
the ipod plays mp3's. everyone has mp3's. if you can't make it
an mp3, it's really not very useful since we do call them "mp3
players." it's not a Microsoft trick, it's that everyone else is...
well, not so smart. and thanks to that, Apple will rule the area.