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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Pink who wrote (5711)	1/8/1999 8:45:00 PM
From: biffpincus	Read Replies (1) \| Respond to of 18998

RNWK - RealNetworksInc - a short "net services" candidate ... I came across this post on AOL written by an "Arentz65". Excellent points made and a place to start some serious DD. RNWK ended up 9 1/2 points, but had spiked to a massive 66 at noon ... almost a double in one day..... there was a press release today issued by a RNWK partner (edited below) which I personally cannot see as the engine behind today's upward move: Company Press Release Streaming Media: A/V DailyNews' Headline News and Sports Featured On RealNetworks' RealGuide PHILADELPHIA--(BUSINESS WIRE)--Jan. 8, 1999--DYNAMIC MEDIA.COM's (OTC BB:DIMG) A/V DailyNews announced that its streaming audio and video Headline News is now available on RealNetworks' RealGuideâ„¢ service real.com. That was the essence of the press release. Below, is the short argument. Interested in your thoughts... XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxx I'll try and make a case why RNWK is an excellent long term short. In my opinion RNWK is one Internet company that will be out of business within a couple of years. One of the technologies to be announced next week by Apple at MacWorld will be Quicktime 4.0. The long awaited update will allow real time media streaming. QT 4 has several advantages over RNWK products. 1. There is no need to convert the media into a special format (as you must if using RNWK technology) before serving it. 2. Over 50% of the video and 80% of all multimedia on the web is created in QT format. This media then is ready to be streamed with no further work. 3. The software that serves the media will be free. RNWK derives 80% of it's revenue from sales of it's server software. 4. QT 4.0 will be able to read competing standards. 5. Any QT compliant program will be able to play media off the web. No special viewer software is needed. 6. QT 4 has already been chosen as the basis for the next MPEG format. MPEG-4 will provide a wide acceptance for QT 4. RNWK has an edge in that QT 4 is very late to market. RNWK has had time to gain acceptance in the streaming media market. The reasons given above though go directly to the heart of RNWKs business plan. The cost of RNWK server software Is the Achilles heel of the company. Combine that with the fact that most media on the Internet is already In QT format there is then a compelling reason why content providers will eventually shift to QT 4 streaming. RNWK Is basically a one product company that Is about to face a competitor that Is both easier to use, technologically superior and without cost. I do not see how the company will ward of such competition. Given that QT 4 Is the basis for the next MPEG format Streaming media will be an open standard. No one will make money directly off the streaming of media. RNWK has tried to secure a closed standard on the Internet but that goes against the history of the Internet where open standards are preferred and closed standards are viewed with suspicion. I do not see this as a competition where the standards can coexist In the market. RNWK does not offer any advantages while including several disadvantages In it's use. Eventually the market will shift away from the closed standard and toward the open standard. As that happens RNWK will see it's revenues slowly dry up and a company that has never earned a dime will be forced out of it's primary market.