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Texas Instruments aims to fend off Intel with Real deal

The chipmaking giant may feel Intel breathing down its neck, but it has responded by striking a strategic agreement with streaming media company RealNetworks.

LAS VEGAS--Chipmaker Texas Instruments may feel Intel breathing down its neck, but it has responded by striking a strategic deal with RealNetworks.

Texas Instruments and streaming media company RealNetworks announced Sunday at the Consumer Electronics Show here that RealPlayer software, which consists of RealVideo and RealAudio 8, will be integrated into two of TI's digital signaling processors (DSPs) by the second quarter.

The deal is significant for TI because it gives the company's DSPs another feature that differentiates them from rivals' chips. For RealNetworks, the deal saves the company the hassle of convincing every device maker to use its software.

MP3 players and other products with the RealPlayer-enabled DSPs should be available later this year, according to RealNetworks representatives.

One of the two TI DSPs under the deal is the DA250. The other is a DSP that will be incorporated onto TI's Open Multimedia Applications Platform (OMAP), or the core components for future wireless devices.

Cell phone makers, including Nokia, Ericsson, Sony and Handspring, have endorsed OMAP. TI's DSPs already are used in MP3 players from Sony, RCA, Sanyo, Samsung, Toshiba and LG Electronics.

Among the rivals that TI is most concerned about is Intel.

Late last year, Intel entered the DSP market when it announced it would team with chipmaker Analog Devices on a new DSP structure called Micro Signal Architecture.

Intel is attempting to diversify its interests to include products that can address the rapidly growing cell phone industry, which ships nearly 10 million units per week. Analog Devices will focus on MP3 players, digital cameras and digital subscriber line (DSL) modems.

TI holds a 48 percent market share of the DSP market, according to research firm Forward Concepts. According to RealNetworks figures, about 170 million people use RealPlayer, making it the No. 4 software application in the United States.

"This agreement broadens our means of distribution, while it helps TI differentiate its DSPs," said Peter Zaballos, director of wireless marketing at RealNetworks. "By going to the source, we don't have to chase down every manufacturer and get them to put our technology in their products, and they don't have to worry about adding it. They can concentrate on adding other features to their devices."

Gartner analyst P.J. McNealy called the deal a "significant step for Real in its battle for the streaming-video viewers with Microsoft because TI doesn't support Windows Media Player. But Real may have only won a battle and not the war."

McNealy added that because the alliance is nonexclusive, there's nothing holding TI or RealNetworks from teaming with Intel and its DSP or Microsoft and its Media Player.

"This is a good deal for both TI and Real, but TI remains agnostic," said E.R. Cole, chief technologist of Internet Audio for TI. "It's simply a business issue. This alliance makes us competitive because it differentiates us."

And apparently there?s nothing holding TI back from working with Intel either. In fact, RealNetworks? RealVideo 7 and 8 is based on streaming video technology from Intel Labs.

Intel has been working for some time on new technologies, such as streaming video, that push the capabilities of PCs. The company does this to bring new features to market that require more processing power and thus spur consumers to buy higher-end machines.

Meanwhile, RealNetworks rival Microsoft rounded up support for its Windows Media Player from 11 new digital-music products, the company announced at CES. The brings the total number of devices that have adopted the Windows Media Format to more than 60.

The devices, which range from portable audio players to components for stereo systems, will support both Windows Media Audio 7 and the test version of Audio 8, which was released in December. Among the companies jumping on board are e.Digital, Frontier Labs, Intel, Rio, and Thomson Multimedia.