Morpheus gets tune-up, delays 2.0

The company on Tuesday released an update to its Morpheus Preview Edition software that offers instant messaging from PalTalk that connects with AOL Instant Messenger (AIM), among other features. Dubbed Morpheus 1.9, the software is based on the Gnutella architecture, according to the company.

StreamCast, formerly known as MusicCity, previously had licensed its technology from the Netherlands-based Kazaa BV. It switched to the open-source Gnutella technology after an unexpected, temporary shutdown of its service.

The Morpheus update comes against a backdrop of frustration over delays of its 2.0 software and mounting legal headaches. In December, StreamCast told people using its software that it was close to releasing version 2.0, which will support Windows XP. But the company has yet to launch the new Morpheus.

Meanwhile, StreamCast has been waging a legal fight against the big record labels over its file-swapping service. Last month, StreamCast attorney Andrew Bridges, a partner with high-profile Palo Alto, Calif., law firm Wilson Sonsini Goodrich & Rosati, said he was withdrawing from the case.

Despite this setback, StreamCast Chief Executive Steve Griffin said, "We're very anxious to have our day in court."

Analysts questioned whether Morpheus 1.9 will lure consumers. Some said new features such as instant messaging may not interest consumers who are already using other chat services. Other services, such as PalTalk and Trillian, have tried to work with America Online's messaging networks, with limited success.

Regardless, analysts say they are more concerned about StreamCast's legal and financial stability.

"Their survival is more of a question than the delays in their software," said Susan Kevorkian, a research analyst at IDC, a Framingham, Mass.-based research firm.

StreamCast sees its new software--and what it hopes will be a growing audience--as key to its corporate health. The company touted Morpheus 1.9 as having faster downloads and improved search results. StreamCast's Griffin said Morpheus 1.9 solves problems faced by some of its users, such as the inability to connect to the service or to transfer information.

In addition, the premium version of its Morpheus Messenger, which costs $9.95 for three months or $24.95 per year, provides video conferencing on top of access to AIM users. AOL says more than 140 million people are registered to use its AIM service.

Morpheus 1.9 also features a shopping club that gives people access to hundreds of retailers. The company emphasized that it will not track spending habits or collect private consumer data. The feature, quietly added last March, does count the number of times file swappers visit high-profile shopping sites

StreamCast said the Morpheus update also offers a long-distance telephone service, dubbed Morpheus Minutes. The new version is not Mac compatible.

StreamCast's Steve Griffin said the company is "very optimistic" that Morpheus 2.0 will launch this month but declined to provide any details. He said the company is running behind but that the delays are not related to its legal case. Rather, he said, the company needs to work on the software to "make sure we get it absolutely right."

"We are still running toward peer to peer with our arms open," Griffin said. "We think it's the technology of the future, and we want to be an active part in it."