RealNetworks Signs New Carriers in Handset Battle

AMSTERDAM (Reuters)- Feb. 17, 2004 - RealNetworks says it has signed up five telecom companies for its mobile media software, gaining access to 180 million subscribers in its battle with arch-rival Microsoft to stream music and video to handsets.

Spain's Telefonica Moviles, Italy's Wind and TIM, Britain's 02 and Sweden's TeliaSonera have chosen RealNetworks software to send video and music to mobile phones. Real earlier signed agreements with U.S.-based carriers AT&T Wireless and Sprint.

In the David-and-Goliath battle between the two Seattle-area software companies, RealNetworks' Player for desktop computers has been overtaken by Microsoft's Windows Media Player which comes pre-installed with its Windows operating system. The European Union (news - web sites) is expected to rule that Microsoft abused its power.

But the mobile telecoms industry, unlike the computer industry, is not dominated by one software vendor such as Microsoft, and Real has managed to win lots of customers.

"This is positioning Real as one of the, if not the, leading media delivery systems in the mobile telecoms industry," said market analyst Dean Bubley at Britain's Disruptive Analysis.

Over 510 million mobile phones were sold to consumers around the world last year, and less than one percent of those were equipped with Microsoft's Windows Mobile software.

The deals follow last year's breakthrough agreement with Britain's Vodafone Group Plc, the world's biggest mobile telecoms operator, when it adopted Real's software to transmit items from classical music concerts to video feeds of traffic trouble spots to its more than 130 million global subscribers.

"With these new deals we now have potential access to 180 million customers in Europe," said Lee Joseph, general manager at RealNetworks' international mobile operations.

BIG HOPES FOR MOBILE MEDIA

In another sign that mobile media is seen as an emerging opportunity, U.S. electronics maker Agilent said it would launch new wireless network software next week that enables more secure and reliable video services to handsets.

"Video-to-mobile services are a massive opportunity for operators to establish new revenue streams," said Agilent's Senior Product Manager Jorgen Tesselaar.

Mobile video is set to become a consumer's 'fourth screen' after television, cinema and the computer, especially as faster third-generation mobile networks allow for more picture detail, market research group Ovum said recently.

Real's announcements covered software for mobile networks, which allows operators to send media. But the firm also said it had found another customer for its player which, when installed on a handset, decodes the signals and plays video or music.

RealNetworks signed up Japanese-Swedish venture Sony Ericsson (news - web sites), which battles with South Korea (news - web sites)'s LG Electronics for fifth place in global handset rankings, to pre-install its media player in handsets.

Sony Ericsson currently uses software from one of Real's smaller rivals, PacketVideo. Israel's Emblaze is another rival.

Real's software already comes pre-installed on Nokia (news - web sites)'s 3650, 6600, 7650, N-Gage and other models, as well as Siemens's SX1. Motorola has said it will use Real's Player in Linux (news - web sites)-based handsets, Palm uses the player in several of its handheld computer phones and Britain's handset maker Sendo uses RealPlayer in its smartphone model X.

At the moment, only several million of these subscribers have handsets with big color screens and powerful chips to play video and audio, but that will change quickly, Joseph said.

"We're asked by these operators to get (our software) into as many phones as possible," he said. Real Networks' deal with Vodafone runs alongside a sweeping alliance between the British operator and Microsoft. Windows Media Player and RealOne are not compatible and cannot decode and play content encoded in the other format.

But RealNetworks software in mobile networks allows streaming of other formats like the open MPEG4 format, Apple Computer's QuickTime and Windows Media Player.

"These deals can co-exist. Vodafone's deal with Microsoft is aimed at business users who want mobile access to information on their Windows desktops. But I don't see Microsoft as a huge force in consumer handsets where Real is playing," Bubley said.