Vodafone, RealNetworks ink pact, snub Microsoft

AMSTERDAM: Internet media software company RealNetworks, outflanking arch-rival Microsoft, unveiled a deal to supply top European mobile carrier Vodafone with software that streams live video to cellphone users.

RealNetworks said Vodafone would use its software to transmit real-time audio and video -- from classical music concerts to video feeds of traffic trouble spots -- to the UK-based carrier's 119 million customers.

Nokia, the world's largest handset maker, and Ericsson, the largest maker of mobile network equipment, already have agreements with RealNetworks.

"We've got the three number-ones that matter," said Lee Joseph, general manager at RealNetworks' international mobile operations. "This is a strategic win."

Nokia, with a dominant 35 percent share of the global handset market, fears Microsoft wants the same dominance in handsets that it built up in personal computers, and consistently chooses to work with Microsoft rivals.

Vodafone, which operates in 28 countries around the world, said it would start installing Real's software sometime next year.

"We consider it a better quality product," a Vodafone spokesman said.

DAVID AND GOLIATH

Vodafone operations already use barebones RealNetworks software to bring live TV and music clips to handsets.

The deal will also affect mobile phone purchases, since Vodafone will tell vendors it prefers handsets with RealOne.

"Real will be able to sell to many more operators and handset vendors on the back of this deal," said industry analyst Neil Mawston at Strategy Analytics.

He said Real was now also well ahead of rivals such as Israel's Emblaze and PacketVideo.

A tough challenge looms, however, from software titan Microsoft, which already took a big chunk of the market for software that feeds live media to personal computers -- after Real pioneered the product in the 1990s.

Microsoft includes its Media Player in the ubiquitous Windows software that runs 90 percent of all personal computers and about half of all handheld computers.

Cell phones, however, will be no pushover for the world's largest software company, with hardly any of the 450 million cell phones that will be sold this year running on Windows.

As for RealNetworks, Finland's Nokia is so far the only handset maker with the RealOne player pre-installed on some mobile phone models, although Siemens AG and Samsung Electronics will soon start selling high-end handsets with the software.

The software will also be available for downloading to some phones and comes pre-installed on a several handheld computers from Palm, Hewlett-Packard and NEC.

Windows Media Player and RealOne are generally not compatible and cannot decode and play content encoded in the other format.

The RealNetworks software in Vodafone's mobile networks, however, will allow streaming of other formats, including the open MPEG4 format, Apple Computer's QuickTime and Windows Media Player. This keeps Vodafone's options open to include Microsoft devices in its handset range.

© Reuters