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Technology Stocks : RealNetworks (NASDAQ:RNWK)

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To: Pruguy who wrote (3484)6/6/1999 2:26:00 PM
From: Scott C. Lemon  Read Replies (1) of 5843
 
Hello Pruguy,

I guess that I'm not a big fan of companies that allow their "brand" to become hidden behind the UI of other vendors. This allows them to become a piece of "plumbing" and makes it much easier to replace in the future.

> Correct me if I am wrong, but the spinner network is run through
> RBN and the spinner player is a quasi-branded realplayer.

Yes ... currently this is the case.

> Where's the risk in this for rnwk unless you are suggesting that
> AOL will abandon their strategy of giving consumers what they want
> and know and creating a new brand for AOL to try to get all
> rnwk/aol users to switch to.

To answer this I'll try to give some history of my perspective. I have been watching Microsoft for a long time ... and they are the kings of "abstraction". What they tend to do is build software which is compatible with other vendors, but builds a "layer" of software over the competitors products. This layer creates an "abstraction" of functionality ... for example in the e-mail world, Microsoft created MAPI ...the Mail API.

What I see as potential here is this:

1. The Spinner application might be based on Real's technology, but it is not visible. If it's not visible, then it's plumbing.

2. AOL will be able to add more support into Spinner for other media types ... MP3/WinAMP, Microsoft ASF, QuickTime, etc. So the player will support *all* these types ... it will not drop Real.

3. The consumer will start to identify with "Spinner" as the brand, not "Real" ... if they use the Real Player directly, they will seem to have reduced functionality (can't play QuickTime?) but if they use the "Spinner" player things are great. The consumer starts to identify with the Spinner "brand" and no longer sees or understands what Real does ... and they won't care!

> No player on the market is more adaptable than the
> Realplayer...Granted the quality can improve, but AOL knows that it
> will.

Yep ... adaptable to the point of being invisible! I was looking at the FasTV site the other day ( fastv.com ) and realized that the Real Player is so well integrated, any consumer who didn't realize what it was would never know! There was only one little graphic on the home page that indicated G2 was being used ...

> I think this is a very remote possibility....Only 3 weeks ago nscp
> launched their newest browser with very little that is new in it:
> The primary upgrade is the G2 player in nscp 4.6.

I haven't looked yet ... I'm downloading v4.6 now! ;-)

> Why bother with the upgrade instead of just a plug-in unless they
> wanted thr realplayer to be a very strong partner of theirs.

Yes ... I believe that Real is looking for additional delivery mechanisms. Sincce Microsoft isn't going to ship it for them, they need to "piggyback" on other applications to get it installed.

> Additionally, as of 6/3, the official word out of spinner was that
> rnwk is not a competitor but a partner.

I agree. They are and will be. But what other partners will show up, and will the Spinner player start to support all types of media and dilute the "brand" of Real?

> I wil admit that I am concerned about the Winamp purchase because I
> can't figure out where rnwk plays into this piece...

Yes ... I'm not sure what Real does with this ...

> The spinner acquisition seems to me like Case's way of getting more
> control over rnwk without buying into rnwk.

Steve's way of getting more eyeballs and more people going to his portal sites ... ;-)

> I would love to hear your or anyone elses theory on strategy here,
> on AOL's part, but I frankly don't buy that AOL is going to abandon
> using the standard of today, that happens also to be
> anti-microsoft, and try to convert their 18mm users to a foreign
> format. This isn't consistent with their past strategy.

I don't think they'll abandon anything ... it's that they will figure out a way to put their own brand on top. They will have to use Real for quite a while because all the content is in Real's codec format. But they could possibly start to push it to the background as mere plumbing ...

I think they'll start to push their Spinner player ... which uses G2 underneath ... but the AOL crowd will know it as Spinner. ;-)

> My guess is they have something up their sleeve that will play
> itself out over the next couple of months and rnwk will be an
> integral part of it through the realjukebox and realguide and RBN.

This is where we differ a little in perspective.

1. Why RealJukebox when they have Spinner?
2. Why RealGuide when they have Spinner and SHOUTcast?
3. Why RBN if they can use this and their own network?

I believe that AOL is only out for AOL's good ... they are heading down the Microsoft route of working to dominate in eyeballs ... ;-)

Scott C. Lemon
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