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Will QuickTime take on Microsoft?

As Apple prepares its own streaming product, it faces the specter of squaring off with one of its investors.

As Apple Computer prepares to enter the market with its own streaming media, it faces the specter of squaring off with Microsoft, which bears the unusual distinction of both investor and one of the Mac maker's most formidable competitors.

By the end of the year, Apple aims to allow such multimedia content as live video and audio to "stream" over the Internet, allowing content to be played while it is being downloaded on its popular QuickTime software, instead of making users wait until the download has finished. But as the tussle between Microsoft and RealNetworks shows, the software giant will not shrink from competing against a company it invests in.

If it decides to get into the business of licensing its software to people who want to do live Webcasting, Apple's plans mean that it could become a competitor to both RealNetworks and Microsoft. The latter would certainly be the bigger threat.

That's because when a technology emerges that threatens to diminish Microsoft's control over the PC desktop, analysts and others say, it embarks on a course that ensures it stays in control. The tendency doesn't bode well for Apple's move into multimedia streaming, despite the fact that QuickTime is one of the most popular applications on the Net.

"Microsoft likes to be in control of their own destiny. Whenever [a competitor has] a core infrastructure that affects their ability to deliver a compelling experience to customers, they either invent, copy, or buy it," said Pieter Hartsook, a computer industry analyst who covers the Mac market.

Microsoft says it is simply trying to create an open technology platform where everyone can compete. "Microsoft's goals are to create a single, open standard for streaming video, to make the consumer experience simpler and more satisfying, and to give thousands of third-party software developers and content providers the confidence they need to create products on the broadest possible platform," the company said in a recent statement, made in response to allegations of improper behavior from Rob Glaser, CEO of RealNetworks.

Microsoft started its multimedia spree last year with investments in RealNetworks and VDOnet, as well as the acquisition of VXtreme.

Now, the company is pushing to have its investments pay off. Microsoft has lined up 20 of the more prominent Web sites to use its NetShow streaming technology, offering them technical support and marketing money. The sites include Bloomberg, CBS, CNN Interactive, Warner Brothers Online, and CNET, the publisher of News.com.

One such site, CNN.com, prominently uses QuickTime for playing back video files that are downloaded to a user's computer. Now, officials say its use is being deemphasized in part due to Microsoft's ability to tie the use of its streaming technology in with its browser technology.

"We want to reach as big an audience as possible and have users go through the fewest number of extra steps," said Jeff Garrard, executive editor of CNN. QuickTime movies will still be available, but will be used less, partly owing to the fact that their use takes up more power from CNN's server computers than multimedia streaming software.

"Microsoft brings standardization and amalgamation. We as consumers do indeed benefit because we can expect a certain degree of performance," even though that standard may not be the best, said Jon Peddie, president of research firm Jon Peddie Associates.

As an example of how a less-than-optimum technology can become win over the market, Peddie points to electrical wall sockets, which he said are a "terrible interface." Yet every home has many of them.

"There is room for vendors who offer a higher performance solution. The question is can Apple convince customers that its technology is superior enough and force Microsoft to adopt it?" Peddie asked.

Apple declined to comment specifically on how it intends to counter Microsoft's marketing moves. However, Peter Hoddie, the QuickTime architect at Apple, did say that Apple's streaming technology will have a competitive advantage: He touts its ability to stream high-end MPEG-2 (a powerful technology for handling video) full-motion video over corporate intranets as well as low-end audio and video over 28.8-kbps dial-up modems.

In addition, Apple wants to make it possible for documents in programs such as a word processor to easily display live multimedia content.

Already, many computer users and content creators use QuickTime, an advantage that will come in handy for Apple when newer versions are released. And because QuickTime's file format has been chosen as the basis for the powerful MPEG-4 standard, Apple has a leg up on the next generation of content creation.

But the lingering and larger concern is that technology alone isn't always the deciding factor; rather it's technology combined with marketing might. The latter is heavily weighted in Microsoft's favor.

The anticipated release of Apple's new streaming technology won't be the first time Apple and Microsoft have been at loggerheads. Recently, Apple was subpoenaed in the antitrust fight between the Justice Department and Microsoft over allegations that the software giant has tried to pressure Apple to step away from the multimedia software market.

Even before the DOJ became involved, Apple sued Microsoft and Intel in late 1994 for allegedly copying its QuickTime for Windows technology. Industry sources report that the investment in Apple by Microsoft announced in August 1997 was partly in relation to a settlement of outstanding legal issues.