Apple renews streaming bid with QuickTime

Although Apple's flashy new portable computer drew the most attention at last week's Macworld trade show, the computer maker's foray into Webcasting one day may prove to be just as important to its bottom line.

Apple unveiled new details of its plan to catch up to RealNetworks and Microsoft in the market for streaming audio and video. The company wants to help create a market for "personal broadcasting" with its QuickTime software.

The latest initiative, QuickTime TV, "is an architecture pointing toward a time where we will have a service that provides broadcasting and Webcasting to the masses of people," said Frank Casanova, director of QuickTime product marketing. "We have an opportunity to do for video and streamed media what Apple did for desktop publishing."

In essence, Apple would help people create their own television stations by selling them transmission time for broadcasting everything from garage-band concerts to cooking lessons.

Last week, chief executive Steve Jobs unveiled QuickTime TV, which is essentially a collection of content providers on Apple's Web site that are offering audio and video programming via the newest version of its QuickTime multimedia software. The company said content providers such as Disney, ESPN, Rollingstone.com, and Virgin Radio, an Internet music broadcasting service, would be streaming content to users.

To date, Apple hasn't built a self-sustaining business out of QuickTime, which has been viewed as a marketing vehicle for Apple.

Apple also hopes the technology eventually will spark sales of its computers and possibly Windows-based PCs as well. The company does make some money by selling an upgrade to the software that offers a greater variety of authoring and playback features, but not enough to bother spelling out results in its earnings reports.

Both Apple and Microsoft lag RealNetworks in the streaming-media market. Some third-party estimates show the majority of content that gets streamed to users in real time is based on Real's technology, although those numbers are disputed.

According to Media Metrix, in May 1999 RealNetworks' software was used by 13.5 percent of users. About 6.2 percent used one of several versions of QuickTime (including QuickTime 4.0, the only version with live streaming capabilities), and the Windows Media Player was used by 5.3 percent of users. Media Metrix measures the usage of software applications by 50,000 randomly selected users.

Microsoft, which so far has been fighting to gain on Real, may find Apple to be a formidable competitor. For one thing, Apple is making its software available on platforms other than the Macintosh operating system. Plus, Apple is letting software developers tweak parts of its source code and incorporate it into their products for free.

Apple also has a larger installed base of multimedia software players, according to figures from StatMarket and MediaMetrix--and that could help persuade content providers to use Apple's streaming software.

QuickTime a money maker?
"QuickTime TV is not meant to replace the TV," Jobs said during a press conference last week. It adds a "convenience factor" that is not present with TV, he said--meaning that there is more content available for viewing whenever a consumer wants.

Apple's partnership with Akamai will be key to making content convenient to access.

"We aren't buying content ourselves," Casanova said. "We are not in the business of competing against our content providers." In other words, Apple isn't going for advertising dollars, unlike Real.

Apple is going for customers that Real and Microsoft would hope to snare: corporate customers and individuals who want to broadcast information.

Apple's QuickTime game plan

? Apple is giving away its server software for streaming multimedia content to promote usage of the QuickTime player software.

? The company is also allowing people to modify parts of the server software for customized applications under the open-source programming model. This will help them target niche markets underserved by Microsoft and RealNetworks.

? Apple is partnering with Akamai to speed the distribution of content to viewers and has signed new content partners such as Disney and ESPN to showcase material on "QuickTime TV," a site where content is being aggregated.

? Eventually, Apple hopes to generate revenue from the software by selling bandwidth to customers ranging from corporations who want to broadcast conference calls to bands playing for a virtual audience.

But instead of requiring people to buy server or client software or hardware, Apple is focusing on reselling bandwidth--the time and space it takes to send information out on a network.

In addition, there is a "second tier" of content by companies and individuals that Apple thinks it can serve, such as by broadcasting online video and audio conference calls for companies. Broadcast.com already has seen success in that space. For its most recently completed quarter, Broadcast.com reported that revenue from its business services division increased 138 percent over year-ago results, to $9.5 million.

On the individual side, eventually "personal broadcasting services"--such as a family Webcasting a baby's first step to other family members--could be a source of revenue through sponsorships and service fees, according to a recent report from Paul Kagan Associates analyst Jae Kim.

Kagan forecasts that the market for Internet broadcasting--including direct revenue from advertising, the sharing of merchandising revenues, and pay-per-view performances--will be just shy of $20 billion by 2008. And that doesn't include revenues associated with sales of software, hardware, or the required bandwidth needed to provide broadcasting services.

The deal with Akamai is a key aspect to this vision, as it helps the distribution of QuickTime-based content, much in the same way that Real has partnered with telcos to move streaming content closer to consumers so that video quality can be improved and there is less chance that someone will be blocked from viewing popular content. Apple later will be able to sell services to end users via this distributed network.

Another advantage, Casanova said, is that a user doesn't need a powerful, expensive server to broadcast information to a lot of users. Once a copy is requested by a user, it is replicated to Akamai's high-powered server near them and is subsequently available to later users without burdening the original server with requests.