Streaming wars spawn wireless weapons

The battle between Microsoft, RealNetworks and other streaming software companies is moving from the desktop to the cell phone.

4 min read
The battle between Microsoft, RealNetworks and other streaming software companies is moving from the desktop to the cell phone.

As the companies jockey for position in the wireless world, the race is on to secure critical partnerships with manufacturers and chipmakers to beam music, newscasts and other data to next-generation handheld devices.

"We could see a Betamax vs. VHS scenario unfold," said Larry Gerbrandt, a senior analyst with Paul Kagan and Associates in Carmel, Calif., referring to the 1980s dogfight over control of the video-camera recording market, which VHS eventually won. "The ultimate battle of (streaming media) players could well play itself out in the wireless platform."

Streaming technology allows people to tap into audio and video without having to download large files. Like many other Internet players, streaming software companies see cell phones as devices that will let them step away from the confines of desktop PCs. Going mobile has the potential to resolve some standards issues that have plagued streaming technology thus far, analysts say, but it will likely take time to convince consumers that cell phones are ideal for watching videos and listening to music.

"Wireless carriers have slowed down their 3G (high-speed, third-generation wireless technology), and there is a fear that streaming won't be able to be served," said Adam Needles, director of Daedulus Venture Group research.

Still, streaming software companies are preparing for the day the market takes off. Just this week, Microsoft said it would team with Texas Instruments to support Windows Media audio, video and digital rights management technology on the chipmaker's DSP-based processors for wireless Internet devices. The collaboration will allow mobile phone manufacturers to offer Windows Media Player on new products.

The announcement follows a key partnership with NTT DoCoMo to serve up Windows Media on a device dubbed Eggy. About 60 devices now support Microsoft's digital music software, said Michael Aldridge, lead product manager for Microsoft's Windows digital media division.

RealNetworks has struck a similar deal with Texas Instruments that lets its audio players run on wireless devices. The Seattle-based company also scored a deal with Nokia last year, in which the RealPlayer technology will be bundled in Nokia's new smart phones.

War of the giants
A pioneer in the streaming field, RealNetworks had been the dominant player but seems to be losing its edge to powerhouse Microsoft. Merrill Lynch analyst Henry Blodget downgraded RealNetworks' stock in a recent report, citing the growing popularity of Microsoft's Windows Media Player.

In the report, Blodget mentioned a concern that Microsoft will do to RealNetworks what it did to Netscape--take over the market by bundling its software into other products and giving it away for free.

Other analysts aren't buying the browser argument, saying that Microsoft may be making inroads into streaming media but it shows no clear signs of taking over the market.

Apple's QuickTime is also gaining ground but still far from the two heavy hitters, according to a recent Jupiter Media Metrix report that studied the popularity of each player.

Although the war is moving to new territory with wireless efforts, it's as yet unclear how this will affect the broader streaming market.

Efforts to come up with industrywide standards are under way to ensure that the rifts in PC-based streaming do not carry over to the wireless arena. In December, a consortium whose members include Cisco Systems, Intel and the Walt Disney Internet Group joined forces out of concern that wireless streaming products will not work with each other.

Davids vs. Goliaths
Smaller streaming media companies are also making headway in the field, offering new competition.

"Wireless is hot," said Ben Sawyer, researcher and founder of Digitalmill, a Portland, Ore.-based company that consults on emerging technologies. "It's where the money is."

Daedulus Venture Group, a Burlington, Mass., research group that follows emerging communications technologies, has noted a spike in venture funding to lesser-known streaming media companies.

Streaming media company ActiveSky secured $21.8 million in venture funding from a group of investors led by JK&B Capital, based in Chicago. ActiveSky, based in Redwood City, Calif., recently signed an agreement with Handspring to supply a multimedia player for Visor Prism and Visor Platinum units.

ActiveSky's deal accounts for an estimated $105 million for new streaming ventures, some of which include wireless technology.

Despite all the activity aimed at wireless streaming, some analysts are not convinced that it will ever take off.

Bryon Prohm, an analyst for Dataquest in Raleigh, N.C., said that despite the "hype" about wireless streaming, the technology for now can't match a consumer's expectations. That "almost always spells disaster," he said.

Whether wireless streaming will fizzle before it sizzles is not so clear for other observers of the industry. But one thing most can agree upon: Listening to music on a cell phone, or watching snippets of a football game on a handheld, are still years away.

"It's like tomorrow," said Digitalmill's Sawyer. "It's always there but never quite here."