Apple calls RealNetworks a 'hacker' Decries effort to have Harmony songs play on iPods By Rex Crum, CBS.MarketWatch.com Last Update: 7:23 PM ET July 29, 2004
SAN FRANCISCO (CBS.MW) -- Apple Computer said Thursday that it is investigating technology that allows songs purchased from RealNetworks' music store to play on Apple's iPod music players, comparing Real's actions to those of a computer hacker. Apple (AAPL: news, chart, profile) made the comments in a statement Thursday in response to RealNetworks' announcement earlier this week regarding its Harmony technology. Real says Harmony will allow consumers to securely transfer songs bought on Real's music store to the iPod and other music players. "We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod, and we are investigating the implications of their actions," Cupertino, Calif.-based Apple said, adding that it would look into whether its rival had violated any laws with Harmony. Real (RNWK: news, chart, profile) answered Apple's charges with a statement of its own Thursday afternoon. "Consumers, and not Apple, should be the ones choosing what music goes on their iPod," it said. Seattle-based Real denied Apple's claims that it hacked into the iPod's source code to develop its Harmony technology. Real added Harmony "follows in a well-established tradition of fully legal, independently developed paths to achieve [technological] compatibility," and cited Compaq Computer's development of its IBM-compatible personal computers as precedent for its actions. Apple shares rose 37 cents to close at $32.64 Thursday, while RealNetworks fell 1 cent to $5.57. Dustup in digital domain The disagreement could set the stage for a high-profile battle over digital intellectual property, and the reach of the 1998 Digital Millennium Copyright Act. That piece of legislation was designed to update and expand the nation's copyright laws to better cover digital property. With millions of dollars invested in its iPod product line and iTunes music store, Apple believes Real's actions circumvent the DMCA and the protections it provides to the developers of digital technology. Not surprisingly, Real contends that it has done nothing wrong because, according to Real's statement, "the DMCA explicitly allows the creation of interoperable software" such as Harmony. "The question is, 'Can they [Real] do this without a fair-play license?'" said Mike McGuire, research director at Gartner G2. "Apple will say nobody asked us about it." Apple has sold about 4 million iPods since introducing the product in late 2001, and it has sold more than 100 million songs off iTunes in a little more than a year. Because of its dominant position in the legally downloadable music market, Apple has become a frequent target of other technology companies trying to gain a foothold in the business. The computer maker cautioned future Harmony users from getting too excited about Real's new technology, saying that Harmony would likely not work with future updates to the iPod. In addition to Real's own efforts, Sony (SNE: news, chart, profile) unveiled its digital Walkman music player in early July; Dell (DELL: news, chart, profile) and Gateway (GTW: news, chart, profile) have similar products on the market. Apple has taken its own strides to expand its market lead and fend off competitors. Earlier this week, Motorola (MOT: news, chart, profile) said that beginning next year, it would make Apple's iTunes the default music service on its next-generation line of mobile phones. And in September, Hewlett-Packard (HPQ: news, chart, profile) will roll out its so-called hPod, a digital music player that runs on Apple's iPod technology. Apple's partnership with Motorola could make Apple "the Microsoft of music" and could turn the iPod into "the de facto standard in digital music," Merrill Lynch analyst Steven Milunovich said this week in a research note. Milunovich currently holds a "buy" rating on Apple's stock. Jeff Slyn, Owner SLYN Systems & Peripherals (502) 426-5469 serving Kentuckiana clients 7 days a week since 1985! -------------- next part -------------- An HTML attachment was scrubbed... URL: http://www.math.louisville.edu/pipermail/macgroup/attachments/20040730/5650dcca/attachment.html -------------- next part -------------- A non-text attachment was scrubbed... Name: not available Type: image/gif Size: 43 bytes Desc: not available Url : http://www.math.louisville.edu/pipermail/macgroup/attachments/20040730/5650dcca/attachment.gif
