Re: RealAudio of Appraising Microsoft conference

[Christopher Pall <x97pall@wmich.edu>]

  David E. Y. Sarna wrote:
  
  > For the record, Progressive Networds was renamed RealNetworks. It is a
  > public company. Microsoft has about a 10% interest, and no voting
  > rights.
  > or the comapny's prospectus, see
  > http://www.sec.gov/Archives/edgar/data/1046327/0000891020-97-001520.txt
  >
  
      This is an interesting excerpt. I think most of us can read what this
  means to RealNetworks. They've sold out - you won't even know that the
  technology MS is using in their future versions of Windows NT is
  RealNetworks code.
  
      The disturbing reality of software production has come down to this.
  Software companies are no longer formed with the intention of competing with
  Microsoft. They are formed with the expectation that they will fill a niche
  that Microsoft doesn't fill yet - and if and when they do fill that niche,
  sell the technology to Microsoft and let them reap the rewards.
  
  --------- Quote from the contract
  
       In connection with the Microsoft agreement, the Company granted
  Microsoft a
  nonexclusive license to its Standard Code (as defined in the agreement),
  which
  is comprised of certain substantial elements of the source code of the
  Company's
  RealAudio/RealVideo Version 4.0 technology included in its basic RealPlayer
  and
  substantial elements of its EasyStart Server (currently known as the Basic
  Server), and related Company trademarks. Under the agreement, Microsoft may
  sublicense its rights to the Standard Code to third parties under certain
  circumstances. On two occasions during the first two years following
  delivery
  under the agreement, Microsoft may acquire for $25 million and $35 million,
  respectively, a nonexclusive license to subsequently developed versions of
  the
  Standard Code, products based on which are currently distributed to end
  users by
  the Company at no charge. If the Company elects in its sole discretion to
  grant
  an Event License (as defined in the agreement), the agreement provides for a
  
  full refund of each license fee during the first year, declining to 0% over
  the
  following two years. The Company may not assign its obligations under the
  agreement without Microsoft's consent, and a merger, the sale of
  substantially
  all of the Company's assets and certain other events will be deemed to be an
  
  assignment under the agreement. Microsoft is obligated to distribute the
  Company's RealPlayer Version 4.0 for a defined term as long as the Company's
  
  player supports certain Microsoft architectures. The Company also agreed to
  work
  with Microsoft and several other companies to author and promote the Active
  Streaming Format ("ASF") as a standard file format for streaming media. The
  agreement also requires the Company to provide Microsoft with engineering
  consultation
  services, certain error corrections and certain technical support over a
  defined
  term. As a result of Microsoft's agreement with the Company, its acquisition
  of
  VXtreme and its investment in VDOnet, Microsoft will be able to augment
  substantially the functionality of NetShow, its streaming media product,
  which
  could have a material adverse effect on the competitiveness of the Company's
  
  products. See "-- Impact of Evolving Standards," "-- Uncertain Protection of
  
  Intellectual Property; Risks Associated With Licensed Third-Party
  Technology"
  and "Business -- Microsoft Relationship."
  
  --------- End of Quote
  
  
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                Christopher Pall
  Delphi Programmer & Western Michigan Student (CS)
                   ThinkBiz
                Kalamazoo MI USA
               X97PALL@WMICH.EDU
  --------------------------------------------------