To get RealPlayer, you must download it or AOL 6, which includes RealPlayer. But the 100 million or so PCs sold each year with Windows come complete with the ability to stream audio and video through Media Player, while all Windows NT servers contain media production and hosting software.

How do you compete against that? Isn't this precisely what got Microsoft in trouble with the Justice Department? Bundling software with the operating system? Giving away the product for free?

Microsoft executives are justifiably wary of the term "bundling." They insist that the media software is not an added application but, rather, "a core feature of Windows."

"Our focus on digital media didn't just happen," says Michael Aldridge, lead product manager in the Windows digital media division. "We saw that multimedia was a core function of the OS back in 1991. If you look on our media software you'll see that there's a copyright dated 1992 to 2000."

Actually, Microsoft didn't seriously enter the media player business until 1997. When the Web started moving beyond text and graphics to "a level that's now Internet and digital-media focused," Aldridge says, Microsoft recognized that digital media would be the next hot spot. Spurred by RealNetworks' success, Microsoft moved quickly. It bought 10 percent of Glaser's 2-year-old company in exchange for a license to its technology, then consolidated developers and marketing forces into what is now a team of more than 500 people. (Microsoft subsequently sold all of its RealNetworks shares.)

Aldridge echoes Bill Gates' stance on browser bundling: He doesn't apologize for Microsoft's giving away the Media Player as part of the OS. He argues that Microsoft's ultimate goal is to satisfy users by constructing an end-to-end, Windows-centric media solution, one that comes complete with strong copyright protection that will induce major content providers to buy computers with a platform they know and trust -- Windows.

"We're not ashamed of that," he says. "That's where we make our money."

Or, as Gates was quoted as saying in a 1997 Fortune article: "We are a very predictable company. What we did with Windows, we're doing with Windows NT on the server."

And therein lies the key. Microsoft's real interest, say industry analysts, is not so much in domination of the streaming-media software market, but in gaining market share for Windows NT in the server market. By bundling in streaming software and media hosting and serving capabilities, Microsoft hopes to make Windows NT more popular.

"Microsoft is not a streaming-media company; they're using it to sell servers," says Heath Terry, an analyst at Credit Suisse First Boston. So Microsoft actually has a reason for not making versions of its streaming software that would run on any other operating system. It would hurt Windows NT.

"The bundling only works if they have something dominant to bundle it into," says William Kovacic, an antitrust expert and law professor at George Washington University. "If there are strong alternatives, then the bundling is not likely to be legally or financially significant."

In sharp contrast to its near-total domination of the desktop OS market, Microsoft does not dominate the server market. And that's where RealNetworks is thriving.

Even now, NT servers make up only about 20 percent of the publicly accessible Net, according to Netcraft, which means that many Web hosting companies or ISPs looking to expand into the streaming-media business would have to buy and familiarize themselves with new server software if they want to use Windows Media Player.

Or they could choose to go with RealNetworks. The software isn't free, but it runs on 11 operating systems, including Solaris, Mac OS, IBM AIX and Linux. And while the Windows Media and QuickTime players can't run RealNetworks content, streamers can use RealNetworks to offer not just its content but also QuickTime's.

In addition, says RealNetworks' Jordan, "the Net is not a Windows-centric environment going forward. Non-PC devices -- cellphones, Internet appliances, PDAs -- are not standardizing to Windows. If you have a strategy that only embraces one option, you're in trouble."

In such an environment, "it doesn't matter how much Microsoft wants to give their media software away," Terry says. "It's still not worth it." Some corporate clients -- companies that aren't specifically in the streaming business but would like their employees to have access to training videos, for example -- have started migrating to the Windows Media format. But, Terry says, "until Microsoft changes the mind of the entire company, and stops trying to sell servers with applications, they're not going to be able to take Real out of the market share lead."

Favor, it seems, falls to the versatile, says Virginia Prescott, director of interactive media at WNYC. And she ought to know: Streaming only for those using Windows Media has already inspired hundreds of listeners to write protest letters. "They're very disappointed with us, not so much because of the quality but, rather, because we're working only with Microsoft," she says. Indeed, Eben Moglen, a Columbia law professor and counsel to the Free Software Foundation, has even threatened to sue.

Still, neither public support nor RealNetworks' multiplatform, closed-source approach guarantees that Microsoft will remain the Net's Plan B. Microsoft has at least one distinct advantage -- deep pockets -- and has shown no lack of interest in throwing money around. The public radio and television deal, for instance, came about because Microsoft awarded the stations free bandwidth service, Prescott says. Meanwhile, the exclusive Madonna show reportedly cost Microsoft $45 million.

What's more, as computer book publisher Tim O'Reilly points out, Microsoft could ditch its Windows-only approach. If streaming becomes as important as Web browsing, and if Microsoft realizes that its present tactics aren't working, the company could change direction on a dime.

"I wouldn't put it past them to abandon their strategy," says O'Reilly. "When you look at .Net, you can see that they're looking toward a strategy that's not wedded to the OS." The prevalence of Napster's download-and-play model could also throw a wrench into both Microsoft's and RealNetworks' plans, as could competition from QuickTime, which is making an aggressive move toward cameras and other devices.

But for now, the streaming market looks a lot like it did back in 1995. RealPlayer still dominates; RealNetworks' format remains closed but spread over several OS platforms. And Microsoft sits in second place. Microsoft may have to look elsewhere to find the next Netscape to crush. When you look at the numbers, says Paul Palumbo, an analyst with DFC Intelligence, Microsoft domination just doesn't add up.

"Is Real going away?" he asks. "No, they're not. They have too many adherents. They're too clearly in the lead."

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