Intel's investment gives RealNetworks a significant cash boost, and telegraphs the chip giant's hopes for a consumer electronics win.
Intel appears to be spending money like it's going out of fashion: having hit a record high of $12.9 billion in profit
and splashing $125 million in excess cash
on InfiniBand networking know-how from QLogic, it's now throwing $120 million at RealNetworks.
For its cash injection, Intel is to receive 190 patents and 170 pending patents held by RealNetworks around media streaming technologies, along with the rights to software for highly efficient compression and decompression of video and audio streams.
RealNetworks will be known to many as one of the pioneers of the streaming media space: founded in 1995 as Progressive Networks, the company's RealPlayer software was a staple of the 90s browsing experience with around 85 per cent of all streaming media content on the web using the company's technology by 2000.
Sadly, that rise was followed by a fall: the company's entire revenue stream was predicated on the sales of server-side streaming technologies, and as competitors like Adobe began to undercut its prices and Microsoft gave away similar software for free, sales dwindled.
Since then, the company has attempted several times to reinvent itself: in 2003, it acquired the Rhapsody streaming music service before spinning it off again as a separate company in 2010; in 2004 it launched a music download service powered by its homebrew digital rights management technology Helix, but when support for the DRM in devices failed to appear courted controversy with a DRM wrapper scheme dubbed Harmony that allowed its audio to play on iPod and WMA-compatible devices.
More recently, the company launched a DVD ripping package dubbed RealDVD; sadly, a court decided that the software was in violation of the Digital Millennium Copyright Act (DMCA) and its sale was barred. In 2010, things had got tough enough that the company announced plans to hire out sections of its headquarters in order to raise additional income.
What we're trying to say here is this: Intel's cash will come as a welcome boost to a company which has seen its stock price drop by 38 per cent in the last year.
It also telegraphs Intel's intentions in the consumer space: despite the somewhat slow adoption of its Atom Consumer Edition (CE) chips, designed for use in set-top boxes, the company is clearly hoping to steal some of the embedded market from rivals like ARM and MIPS, and RealNetworks' streaming know-how is going to be a big part of that plan.
RealNetworks, for its part, will be granted a licence to use the patented technologies in all current and future products, and will work closely with Intel on the continued development of the software.
In an interview with the Wall Street Journal
regarding the news, RealNetworks chief executive Thomas Nielsen claimed: 'To bring new technology like that to market requires significant reach into the consumer and business markets. A partner like Intel has the capacity and size to do that.
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