Chasing Steve Jobs, Bill Gates Gets Real

The big Microsoft-Real Networks love fest, the hugs and kisses, is not about Bill Gates and Rob Glaser. Instead it’s about the Seattleites versus Steve Jobs, and what he has – the customers. They don’t. The two companies have tried their best to best iTunes and have failed. The consumer is voting for Steve’s products with his/her dollars.

To recap, Real Networks is settling the lawsuit it had filed against Microsoft for money …. a lot of money. If you read the press release you might walk away with the impression that it is $761 million. Let me just decode this PR speak. In reality, it’s for much less. Microsoft will pay $460 million cash and $301 million in soft dollars over next 18 months. A good chunk of the so-called deal is made up of notional dollars that is predicated on the notion that it is the amount Real would have had to pay if it wanted to get the privilege of getting a prominent position on MSN and also be the default online music subscription service for Microsoft. (Apple and Google would be a good match, but that’s a whole different story!)

I find it amusing that Microsoft would do a deal with Real, after all the bad blood. Back in the day, when Microsoft was not middle aged, and slow moving, it would have laughed in Real’s face, and tossed them out of their campus. Didn’t Microsoft cry foul and say it was giving up trying to do deals with record labels, because it was too tough? Is it just me or do others see this delicious irony.

Someone just quipped on IM that Microsoft and Real are like a potential couple who, to everyone else, look like a perfect match but are always fighting with each other, till the point when someone screams: why don’t you guys get over with and do what you need to do in the boudoir. I think after the first 18 months, Microsoft will take a stake in Real, and then swallow the whole kid-cabbodle.

On a more serious note, it does make me wonder if the streaming media is going to become a one-company game. I wonder if Apple would be gutsy enough to open-source Quicktime. I think Google and Apple would have to get cozy. Why? Because the $460 million of hush money could also put a shank in the toolbar deals between Google and Real Networks. I left a word with the Real PR…and hope to clarify this.

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