Compaq PCs to include RealNetworks software

SEATTLE: RealNetworks Inc. said on Wednesday that Compaq Computer Corp., the

world's No. 2 PC maker, will include its software on new computers, giving the

Internet media company an important outlet to consumers as it builds steam for

its online subscription service.

New home PCs from Compaq will include RealOne software, which can be used for

playing video and audio over the Internet as well as recording and storing music

on a computer, RealNetwork's Chief Operating Officer Larry Jacobson said.

Compaq will also include icons and promotions for the RealOne online

subscription service, which lets users get exclusive sports, entertainment and

other content for a monthly fee, Jacobson said.

"It is certainly significant symbolically," said Rob Glaser,

RealNetworks chief executive and chairman said in an interview at Internet World

in New York. He said the company has deals for some of the company's other

products with Sony and Gateway Inc. and has had talks with other computer makers

for RealOne.

RealOne will not be shipped on new Compaqs until next March, when a final

version of the software is released. In the meantime, Compaq will ship the

latest versions of the RealPlayer and RealJukebox programs, Jacobson said.

Deals with PC makers are key to get RealNetwork's software in the hands of

consumers as it competes against cross-town rival Microsoft Corp. for dominance

in the digital media industry. Microsoft's software, the Windows Media Player,

is given a prominent place in its Windows XP operating system, which ships on

virtually all new PCs.

"Through these types of arrangements we can take an even more aggressive

lead through the (PC maker) channel," Jacobson said when asked about

competing with Microsoft. The company uses such deals as a complement to

downloads -- the way the vast amount of its users get Real software, Glaser

said.

The RealOne player will also be the default software for playing CDs and MP3

music files on Compaq PCs. Moreover, an "entertainment" button on the

Compaq keyboard will direct users to the RealOne site, Jacobson said.

"We have all this great content now with RealOne that we can use in a

promotional way," Jacobson said. "This is the deepest-reaching

relationship we've ever had." Jacobson declined to say how many new

subscribers Real hoped to get out of the multiyear deal, which includes

revenue-sharing provisions with Compaq.

"Needless to say, it's a huge opportunity because if we get any sort of

attach rate for our membership, that's great," Jacobson said. Separately,

RealNetworks also said several advertisers have started using RealOne to help

with their advertising.

Glaser said he believes the RealOne software will help drive growth in

interactive advertising, enabling companies to create TV-rich commercials for

the Web. He said initial reaction from advertisers has been enthusiastic.

"They can use the Web for interactivity, depth and direct response and AV

(audio-visuals) for brand and emotional impact," Glaser said.

(C) Reuters Limited.