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Monday, September 18, 2006

Losing Before The Start: RealNetworks And Sandisk Challenge Apple

Stocks: (AAPL)(MSFT)(SNDK)(RNWK)

RealNetworks, which owns the Rhapody music download service, and Sandisk, which has about 10% of the US market in MP3 players, plan to challenge Apple's iPod and iTunes platforms, accordin to the Associated Press. Apple current has a base of about 58 million iPods worldwide.

The two companies have no chance of making a go of it. Like the Microsoft Zune and new versions of the iPod, the joint product will be available for the holidays. But, as a Jupiter Reseach analyst said: "RealNetworks still has an uphill battle in persuading lots of users to go with this offering."

Both the RealNetworks service and the Sandisk media player have been around for several years. Real's attempts to break into the market have repeatedly failed. Unlike Microsoft's Zune, which is backed by a company with $45 billion in revenue and almost unlimited marketing resources, RealNetworks had just $325 million in revenue last year. Its RealPlayer technology was eclipsed by Microsoft Windows Media Player half a decade ago, and RealNetworks has never recovered.

Sandisk and Real should save their money and find a more promising business to get into.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own securities in companies that he writes about
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