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HP drops iTunes, taps RealNetworks for music

Computer maker's highly touted deal with Apple ends at last, with decision to distribute rival music software.

After several years of distributing Apple Computer's iTunes software with its new PCs, Hewlett-Packard is shifting its allegiances to rival RealNetworks' Rhapsody music service, the companies plan to announce Thursday.

The computer maker's decision to drop Apple has been widely expected, after the company said last summer that it would stop distributing an HP-branded version of the iPod.

The deal marks a new direction for HP, which had seen its entertainment products overshadowed by the power of Apple's own brand. Rhapsody will now be the default music-playing software on HP's new PCs and laptops, and beginning in spring 2006, HP customers will get a free 30-day trial subscription to RealNetworks' music subscription service.

"HP is committed to bringing consumers the best PC entertainment experience," HP general manager Bob Lund said in a statement. The computer company had wanted to provide "easy access to a leading subscription music experience," he said.

The deal also offers some potential to further RealNetworks' drive to move its music services beyond PCs.

RealNetworks Senior Vice President Dan Sheeran said his company had been particularly attracted to HP after looking at the computer company's plans for home entertainment devices, although the current deal extends only to HP's consumer laptops and PCs.

"When we look at HP's consumer product lineup, we get very excited," Sheeran said. "We view that as a great potential opportunity for Rhapsody to flow into other devices."

The first step toward that will likely be to develop a remote-control function that can be used with versions of Rhapsody running on HP's TV-connected Windows Media Center Edition PCs, Sheeran said.

HP's initial deal with Apple was launched exactly two years ago, at the 2004 Consumer Electronics Show in Las Vegas. Then-Chief Executive Officer Carly Fiorina made much of the company's decision to distribute its own version of the iPod. But the company ultimately found that its line of music players often lagged behind the Apple-branded devices.

RealNetworks also on Thursday is expected to unveil a separate distribution deal with cable giant Cox Communications, which for the first time will allow the music service's monthly fee to be included on a customer's cable bill. Sheeran said that could make it easier to retain subscribers.