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Thursday, February 10, 2005
RealNetworks loosens commercial license

RealNetworks Inc. on Wednesday said it has made the commercial license for its multimedia technology more flexible, hoping to broaden the company's reach in cellular phones and other handheld devices.

The Seattle-based company said device manufacturers can now license only the RealAudio or RealVideo codec, which is software that encodes/compresses and decodes/decompresses audio and video data streams. Manufacturers before had to also license RealNetworks' Helix DNA Client, which is the playback engine.

By agreeing to license only the codec, RealNetworks hopes to make its technology more attractive to manufacturers of low-end devices that have no need for a playback engine, Kevin Foreman, general manager for RealNetworks's Helix unit, said.

For example, mid-priced cellular phones with limited audio capabilities usually have a playback engine embedded in the operating system, so would only need the codec, Foreman said.

Nevertheless, the move is not expected to have much impact in RealNetworks's uphill battle against Microsoft Corp., which sells the Windows Media technology that dominates the desktop and music players outside of the market leading iPod from Apple Computer Inc., Martin Reynolds, analyst at market researcher Gartner Inc., said.

Mid-market device manufacturers, in general, are already using multimedia technology, and have no need for another system.

"Unless RealNetworks can bring some real significant advantages, they're not going in there," Reynolds said.

However, Nokia Corp., the world's largest cellular phone maker, said Wednesday in a separate announcement that it was expanding its use of the Helix DNA Client and the RealAudio and RealVideo codecs in a wider variety of its cellular phones. The Finnish company has been using RealNetworks technology in its Series 60 phones.

Nokia uses the Symbian operating system in its high-end advanced cellular phones, called smartphones, not Microsoft Windows.

The smartphone market, which is new, but growing, is one area that remains open to companies like RealNetworks, Reynolds said. The market is young enough that there is no dominant technology vendor.

"It's still a small market, but it's going to be a big market eventually," Reynolds said.

While Microsoft sells proprietary technology, RealNetworks has taken a far more open approach, developing and licensing technology that can play every video and audio format, except Microsoft's, Foreman said.

The company also licenses its Helix playback engine and other technologies under the open source GNU General Public License. It also has a second open-source license that grants patent rights to the source code.

RealNetworks's success in the smartphone market depends on it attracting developers to its Helix DNA platform, which is comprised of a variety of tools for building multi-format technology for playing, creating and distributing multimedia content.

To that end, RealNetworks on Wednesday released a Technology Compatibility Kit designed to let handset manufacturers test the multimedia functionality of their Helix technology.

"The key is in content-management distribution," Reynolds said. "If they can get the content creator to use their tools, then they control the pipeline."

Microsoft, however, also sells development tools for its Windows Media platform.

Despite its focus on multimedia software tools, RealNetworks generates 83 percent of its revenues through selling online services, such as music and game downloads, to consumers, Foreman said.

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