RealNetworks said it has hired Max Pellegrini to run its mobile entertainment division, which offers a range of services to carriers and device manufacturers.

He replaces Mike Lunsford, who is leaving the Seattle-based company after five years.

In his new job, Pellegrini will also be charged with developing new consumer services for smartphones. Pellegrini comes from premium mobile Web firm Dada.net, where he was chairman and CEO. Dada was acquired by mobile entertainment company Buongiorno in 2011, which was then bought by NTT DoCoMo last year.

RealNetworks is attempting to reinvigorate its business under the leadership of its founder and chairman, Rob Glaser, who is currently interim CEO, by focusing on some core areas, such as mobile entertainment.

It reaches consumers via partnerships with carriers such as T-Mobile and Verizon, offering ring-back tones, ring tones and music on demand.

The digital media pioneer, which is in the midst of yet another effort to rebuild its business, said Tuesday that it is sacking about 7 percent of its workforce and may lay off an additional 7 percent in the months ahead. Some 80 RealNetworks employees will lose their jobs as a result, with another 80 left in a lousy will-I-still-have-a-job-by-the-end-of-the-year limbo for the next few months.

The move, part of Real’s plan to reduce costs by $45 million, was announced to employees in a company-wide email from founder and newly-returned CEO Rob Glaser.

Dear RealNetworks Team,

I’m writing to provide an update on the progress we’ve made over the past 8 weeks and to provide some context and information regarding the layoffs that are taking place today.

When I came back in as Interim CEO on July 3rd, I said we would focus on 3 things:

Reviewing and assessing all of our businesses and new initiatives,
Coming up with a go-forward Strategy for RealNetworks that would set us up to grow and thrive, and
Putting together a plan to stop burning cash and to return the company to profitability.

I also said we would move fast, have a bias towards action, and would work hard to complete all 3 of these efforts within 2 months.

After a lot of hard work by many people across the company and around the world, today I report to you that we have indeed achieved the 3 objectives we set out to work on beginning 8 weeks ago.

Very soon I will have a lot more to say about our collective assessment of our businesses & new initiatives, and about our go forward strategy. Specifically, we have scheduled a series of company meetings – both in Seattle and at our main offices around the world – for on or around September 6th. After these meetings I believe that each of you in attendance will walk away with a clear understanding of our strategies and excitement regarding where we’re going.

Today I will discuss our plans to return the company to profitability — in a way that will set us up for future growth & success.

As we mentioned on our financial results call on August 8th, our senior team has put together a plan to cut at least $45 Million of annualized costs. This plan has several aspects to it; one of the main ones is to streamline our operations and to do things more efficiently.

Unfortunately, a major part of this streamlining entails reducing our workforce from approximately 1140 people to about 980 people. We are doing this in two phases. The first phase, which begins today, involves laying off approximately 80 people, who are being given notice today.

The second phase, which will take place over the next 3 to 7 months, involves approximately 80 more people, who are being notified today that there is a specific future date when their current assignment will be ending. We hope to redeploy a number of these people when their current assignments end, but as of today don’t know how many we will find positions for. These people are working on projects that will merge duplicate systems or otherwise make us more efficient.

I want to express my deepest gratitude to the approximately 160 people affected by today’s announcement, and also my remorse that we have had to take these steps. You have all made major contributions to RealNetworks. We are grateful for everything you have done for our company and our customers.

I also want to express my appreciation to the approximately 980 people who are not directly impacted by today’s actions, and to acknowledge that many of you are indirectly affected, because of the impact on your colleagues and friends.

Permit me to close on a personal note. When I came back into Real after having been away from day-to-day operations for 2 ½ years, I thought there was a pretty high likelihood that there would be a day like today. I knew it would suck for everyone, and indeed it does.

But I promised myself that if we did have to do a significant layoff, I would do everything in my power to make sure that when we did it we also knew where we were going. I wanted to be able to look everyone in the eye and tell them that we have a plan to succeed that I believed in from the bottom of my heart.

I feel like we are almost there. While we still have a few areas to work out, we have made great progress. I can honestly tell you today that we are at least 80% of the way to having such a plan for every major part of our company, and have line-of-sight on the final 20%.

This clarity on strategy, as you would expect, has significantly influenced how and where we are cutting costs, and where we are investing for the future. I look forward to discussing this further when we meet next week.

Rob

Way to slip that leadership shake-up into the pre-Fourth of July news dump, Real!

Real offered little in the way of explanation for Nielsen’s abrupt departure, which comes less than a year after he was tapped as CEO. “The board and Thomas mutually agreed that the CEO position wasn’t the right fit,” Glaser said. “We thank Thomas for the contributions he has made in moving RealNetworks forward and wish him well in his new endeavors.”

Nielsen is the second CEO Real has lost in as many years. His predecessor, Bob Kimball, lasted only a year in the job.

The company’s board of directors has already begun a search for a new CEO.

Below, the message Glaser broadcast to Real employees today apprising them of the changes:

Team-

I’m writing to tell you about a change in leadership at RealNetworks.

Thomas Nielsen has resigned as President & CEO, effective immediately. Thomas and RealNetworks’ board have mutually agreed that Thomas wasn’t a fit.

The board has asked me to step in as Interim CEO. I’m humbled and honored to take on this responsibility.

RealNetworks is a great company that has done amazing things in the past and that will do even more amazing things in the future.
We will have a company meeting next Monday (July 9th) in Seattle to discuss things in more detail. We also plan to send out a short video message for our employees located outside of Seattle.

In the interim, let me make 3 points.

1. We have a lot to do to bring RealNetworks into the future. I will come to work every day with a sense of urgency and a bias towards action. I want all of you to do the same. Our two highest priorities will be to lock in on a go-forward strategy for RealNetworks, and to get cashflow positive. You will hear more about this in the coming days and weeks.

2. I’m not a candidate for permanent CEO. Because of personal and other professional responsibilities, I can’t sign up to be permanent CEO. Having said that, while iCEO, I can promise you that I will give 100%.

3. We all recognize that RealNetworks has had too much change in the past 2 ½ years. Along with my colleagues on the senior team and on the board, I’m committed to setting the company on a stable, long-term path to success and to a smooth succession plan.

On behalf of the Board and the entire management team, I want to personally thank Thomas for his efforts. I look forward to seeing our Seattle employees next Monday and hearing from our global employees.

Rob

A new free Android and iPhone app called Sidecar brings a few tweaks to the mobile dial pad, such as helping people share live video, photos, locations, contacts and texts during phone calls.

What’s nice about Sidecar is that it allows all those items to be shared after a normal phone call is already happening.

This is the kind of functionality that would probably seem more natural within the native dialing experience than within an application, but a start-up has to start somewhere.

So instead of being in the middle of a phone conversation, and then switching tasks to the address book to look up someone’s phone number and reading it out loud, a Sidecar user can tap on the big “contact” button, scroll to the right number, and send it directly to the person on the line.

As for its video feature — which helps users stream live video into an existing call — Sidecar has actually filed for a trademark on the phrase “See What I See.” As you might guess, the focus is to show what’s in front of the caller, unlike something like Apple’s FaceTime, which defaults to iOS devices’ front-facing camera.

The Sidecar app has a simple — you might even say rudimentary — interface. It works best when one Sidecar user calls another. Sidecar users can dial out to nonusers over Wi-Fi, and for free within the U.S. and Canada.

Founded by former RealNetworks execs Rob Glaser and Rob Williams, Sidecar was previously a social video service called SocialEyes. Funnily enough, when it launched last year, I faulted the company for its lack of mobile support.

Sadly for me, as it’s a product I find super useful, the Summify service will be shut down, according to a blog post describing the deal this morning.

Instead, five members of the Summify team will be joining Twitter’s growth team in San Francisco to help work on its products “to explore ways to help people connect and engage with relevant, timely news.”

Summify had started as an email service and extended to an iPhone app. One of its more novel features was that it focused on giving users less news instead of more, by sending users daily email summaries of only the most important stories. At the end of each day’s list it said “You’re done!”

The service picked those stories through a combination of how many times each user’s contacts had recently shared them on Twitter, Facebook and Google Reader, and how many times they had been shared on those networks globally.

Summify disabled new registrations today and dropped some features in anticipation of shutting down the service at an unspecified date.

Summify, which was started in Romania and based in Vancouver, had raised seed funding from investors including Accel Partners, Rob Glaser and Stewart Butterfield.

I was on the phone with its two founders: Alon Maor, CEO; and Dan Sahar, VP of marketing. They had just started telling me about how they plan to sell network appliances that network operators — like, say, Comcast or Time Warner or Verizon — might put on their network in order to help them meet the growing demand for video content. The aim, Maor told me, is to get the most popular content as close as you can to the customer.

The first thing that popped into my mind was creating an appliance that sits on the network; close to, but not in the customer’s house. Maybe in the nearest network hub or central office. It turns out I was right. Then I wondered aloud what Qwilt might be using as storage technology. Could it be, maybe … flash memory? The chips that have so revolutionized the data centers of companies like Facebook and Apple and the banking systems of Credit Suisse, among others, when put to use by the likes of Fusion-io and Violin Technology?

Why yes, it does use flash memory, they told me, making them the latest member of the steadily growing “Flash Madness” club, which gives me yet another excuse to use the image taken from the cover of Flash Comics #1, circa 1940. For reference, the other members are Fusion, Violin Memory and Pure Storage.

Maor and Sahar laughed on the other end of the line at my guesses. “Would you like a job in our engineering department?” Sahar kidded me. I didn’t answer, because I wasn’t done guessing things like how Qwilt does what it does. “You must use some kind of algorithm to figure out what’s popular,” I said. Right again, mostly. The interview hadn’t been going for as much as five minutes, and I hadn’t even asked a single question and pretty much had it all figured out.

Well, not everything. There was the small matter of funding. Qwilt has raised $24 million in two rounds from Accel Partners, Redpoint Ventures and the Crescent Point Group, a fund based in Singapore. Maor is a Cisco veteran who got absorbed into that company following its $200 million acquisition of P-Cube. Before that, he was an engineer at Seabridge, which is now known as Nokia Siemens Networks. Sahar was director of marketing at Crescendo Networks, now part of F5 Networks. Tom Dyal, a Redpoint partner, is on Qwilt’s board.

Video is so popular with consumers that Internet services providers are struggling to get their networks scaled up to meet the demand, Maor says. The traditional way to solve that problem when everyone is watching the same show on Hulu, or the same movie on Netflix, is to just add routers and pray. That’s expensive. What if you could add some extra piece of gear that works with the existing network infrastructure? If you could figure out what was the most popular show in a particular neighborhood, make a copy of it right in that very neighborhood, and deliver it from there rather than all the way back from Hulu’s or Netflix’s data center, you’d lessen the network’s burden.

So that’s exactly what Qwilt does: It has three patents pending on processes for determining what video applications are being used on a network, and for figuring out what content is most popular in a particular area. So if you’re in a neighborhood full of “Jersey Shore” fans, the Qwilt box would figure that fairly quickly, and keep copies of it close at hand so that everyone gets their required daily dose of Snooki.

Also on Qwilt’s board is Rich Wong of Accel; Peter Wagner, an independent board member who has previously worked at Accel; Ohad Finkelstein, a partner at Crescent Point; and Giora Yaron, the former chairman of Mercury Interactive, which is now part of Hewlett-Packard. Also investing is Rob Glaser, the former CEO of RealNetworks.

Got all that? I told you it was an easy interview.

A search is underway for a replacement, and in the interim, the board has appointed Mike Lunsford as a temporary replacement.

In a statement, Kimball said: “I took on this role to lead a restructuring and transformation of RealNetworks into a more lean, efficient and effective business and we have completed that phase of RealNetworks’ transformation.”

During his watch, he has eliminated more than $70 million in annualized operating expenses and created a product called Unifi, which is a digital locker on mobile phones. “All this work has set the stage for Real to embark on its next phase with a clean bill of health and a strong foundation,” he added.

Many of the cuts came in the form of layoffs, including cutting 25 percent of the VPs earlier this year. He’s had a no-nonsense approach to telling shareholders that the company has a lot of catching up to do since it had a nearly nonexistent product pipeline. “Because some of our past products failed, we have work to do to rebuild our pipeline,” he previously said.

Kimball has been at Real for the past 12 years, and was appointed to the CEO role after Founder Rob Glaser stepped down.

Glaser, who is currently chairman, was also quoted in the release: “Bob has made a real difference at RealNetworks over the years and we thank him for his great contributions. We are pleased to have Mike Lunsford in place to lead the company in the coming months while we search for a permanent CEO.”

Lunsford, who joined the company in 2008, is currently Real’s executive vice president.

This is just hitting the wires: Yet another restructuring of RealNetworks, complete with layoffs, office closures and a new organizational look.

The beleaguered Internet media software company, based in Seattle, is cutting 85 jobs, including a good chunk of its exec team, along with dumping some global offices. This means about $10 million in restructuring charges, said RealNetworks (RNWK) in a statement.

RealNetworks has been on a rocky road of late, including the departure of founder and longtime CEO Rob Glaser in January.

Here’s the official press release with all the reorg deets:

RealNetworks Reorganizes Business; Focuses on Growth Initiatives

SEATTLE–June 22, 2010–RealNetworks, Inc. (Nasdaq: RNWK) announced today a significant reorganization of its business and operational structure. The reorganization is a key milestone in Real’s execution of its previously announced strategy to simplify, restructure and grow.

Real has consolidated its Technology Products and Solutions and Media Software and Services business units and organized them into functional teams that represent product development, sales and marketing, and service delivery over a carrier-grade delivery platform.

“This reorganization marks a significant milestone in our transformation of RealNetworks,” said Bob Kimball, president and acting CEO of Real. “Restructuring RealNetworks into functional groups creates a far more efficient organization focused on developing great products that can be delivered through any of our distribution partners.”

As part of this reorganization, the company eliminated about 85 positions, including about 25% of its executive ranks. The new organizational structure is designed to reduce the spans and layers of management to create greater efficiency, teamwork and customer focus.

Real also reduced its office space in Europe, Asia and its Seattle headquarters. As a result of the reorganization and reduction in office space, Real expects to record restructuring charges of approximately $10 million for the quarter ending June 30, 2010. Of these charges, approximately $3 million is related to the reduction in force and approximately $7 million will be recorded as a loss on excess office facilities.

Ironically, it was Accel that first funded the digital media pioneer, leading a critical $5.7 million round for RealNetworks (RNWK) in 1995.

Glaser said in an interview with BoomTown this afternoon that he will focus on digital media, as well as social and mobile start-ups, especially in Seattle and the Pacific Northwest area where he lives and where he founded RealNetworks.

As for becoming a VC after years of being an entrepreneur, Glaser (pictured here) said he was looking forward to being on the other side, especially at Silicon Valley-based Accel.

“I have never seen a more entrepreneurially-aligned venture firm,” he said. “And it is a really exciting time to be investing in a firm with that kind of high-density intelligence.”

The rest of Glaser’s time will be devoted to his board duties, as well as other political and charitable pursuits, including focusing on new baby: 10-day-old son, Max.

Glaser stepped down as longtime CEO of RealNetworks earlier this year, but has remained its chairman and owns more than one-third of its shares.

Although the company has struggled in recent years, RealNetworks has been a genuine and innovative pioneer in Web audio and video software and an early player in Web music services, although not everyone was a fan of the technology, because of its aggressive deployment.

The company was originally called Progressive Networks after Glaser’s political bent.

There have been several well-known entrepreneurs who have turned into VCs–most recently, Netscape Communications founder Marc Andreessen, who started a firm.

Here’s the official press release:

Rob Glaser, Founder of RealNetworks, joins Accel Partners

Palo Alto, CA, May 25, 2010: Accel Partners, a leading global venture capital and growth equity firm operating in Silicon Valley, Europe, Israel, China and India, today announced that Rob Glaser has joined the firm as a Venture Partner. At Accel, Rob will focus on digital media technology, social media, and mobile service investments.

Rob currently serves as Chairman of RealNetworks, which he founded in 1994. Rob has been a member of the Accel Partners family since it invested in Real(Nasdaq: RNWK) in 1995. In addition to his role as Chairman, Rob served as Real’s CEO from February 1994 through January 2010, leading the company from scratch to over $500 Million in revenue. Real went public in 1997.

Rob’s extensive experience as a digital and social media pioneer should prove to be an asset for Accel’s renowned and growing technology portfolio. Jim Breyer, a Managing Partner in Accel’s Palo Alto office, said “We have been delighted to work with Rob as an entrepreneur and CEO since 1995. His thought-leadership in the world of digital media and the consumer internet are well known, and we are very excited to have him join the Accel team in his new role as “Venture Partner.”

“After years of working with Accel as an entrepreneur, I look forward to working side-by-side with the Accel team to help identify companies which will benefit from the same kind of resources and partnership RealNetworks was so fortunate to have,” said Rob. “There are a wealth of promising startups in the world of digital media and I am thrilled to have the opportunity to work with Accel to help them succeed.”

Prior to founding RealNetworks, Rob worked for Microsoft for 10 years in a number of executive positions, including Vice President of Multimedia and Consumer Systems. Before joining Microsoft, Rob founded his first company, Ivy Research, in 1981 to make games for the newly launched IBM PC. Rob has also been an early stage investor in several successful technology companies including TellMe, PlanetOut, and SmileBox. Rob’s relationship with Accel is parttime, enabling him to keep time open for other engagements, including continuing to serve as Chairman of RealNetworks.

Rob is a 1983 graduate of Yale University, with a B.A. and M.A. in Economics and a B.S. in Computer Science.

Rhapsody, along with Best Buy’s (BBY) Napster, sell music via monthly subscription, as opposed to Apple’s (AAPL) a la carte download offering. But neither service has been able to gain much traction, despite years of effort.

Real Networks (RNWK) currently owns 51 percent of the Rhapsody, which it started, and Viacom’s (VIA) MTV the remainder. Restructuring will give both companies a 49 percent share, and “one or more minority stockholders” will own the rest.

There are a few other details, spelled out in the SEC filing below (for instance, Real needs to pony up some cash, and MTV gets released from some of the marketing agreements it signed on for a couple years ago). But the takeaway is this: Both companies get to move the money-losing music service off their books, and the new structure may theoretically give them a better chance of finding a buyer for the thing.

Last month Real’s founder, Rob Glaser, announced he was stepping down from the company’s CEO spot. But this reorg has been in the works for a bit: Real alerted shareholders to a possible move back in November.

Here’s the relevant text from the SEC filing:

On February 9, 2010, RealNetworks, Inc. (“Real” or “RealNetworks”), RealNetworks Digital Music of California, Inc., a wholly owned subsidiary of Real, MTV Networks, a division of Viacom International Inc. (“MTVN”), DMS Holdco, a wholly owned subsidiary of Viacom International Inc., and Rhapsody America LLC, a Delaware limited liability company (“Rhapsody”) and joint venture formed by Real and MTVN (together with the other parties listed above, the “Parties”), entered into a Transaction, Contribution and Purchase
Agreement (the “Transaction Agreement”), which contemplates a restructuring of Rhapsody. Real and MTVN formed Rhapsody in August 2007 to jointly own and operate a business-to-consumer digital audio music service. Real currently owns 51% of the equity of Rhapsody and Viacom owns the remaining 49%.

At the closing of the transactions contemplated by the Transaction Agreement, Rhapsody will be converted from a limited liability company to a corporation, and the Parties expect that Real and MTVN and one or more minority stockholders will hold the outstanding shares of Rhapsody such that Real and MTVN will own slightly less than 50%, but an equal amount, of such outstanding shares. Real will contribute $18 million in cash, the Rhapsody brand and certain other assets in exchange for shares of convertible preferred stock of Rhapsody, carrying a $10 million preference upon certain liquidation events. A portion of Real’s cash contribution is to repurchase the international radio business that was previously contributed to Rhapsody. MTVN will contribute a $33 million advertising commitment in exchange for shares of common stock of Rhapsody, and MTVN’s previous obligation to provide advertising of approximately $111 million as of December 31, 2009 will be cancelled. In addition, both the Stockholder Agreement, dated as of August 20, 2007, between Real and Viacom International Inc., on behalf of MTVN, and the Limited Liability Company Agreement, dated as of August 20, 2007, among the Parties will be terminated, including the put and call rights held by Real and MTVN and MTVN’s rights to receive a preferred return in connection with the exercise of Real’s put right.

Real expects that the transactions contemplated by the Transaction Agreement will be completed late in the first quarter of 2010, subject to the satisfaction of customary closing conditions. At the closing, the Parties will enter into a Stockholder Agreement that contains provisions regarding the governance of Rhapsody, stock transfer restrictions and approval of certain corporate transactions. Rhapsody will
be initially governed by a Board of Directors with two directors appointed by each of Real and MTVN and one independent director appointed by mutual agreement of Real and MTVN. At the closing of the transactions, the Parties will also amend certain existing agreements, including the expansion of the technology and intellectual property licenses from Real to Rhapsody relating to the core technologies for the Rhapsody audio digital music service to provide worldwide, perpetual licenses and certain rights for use of the core technologies in business-to-business audio music services.

Upon the completion of the transactions contemplated by the Transaction Agreement, Real expects that it will no longer consolidate Rhapsody’s financial results with Real’s consolidated financial statements.

BoomTown just could not wait for Carol Bartz’s one-year anniversary at Yahoo (YHOO) to roll around so that the judging could commence. Kara and Carol have a famously sordid history, possibly involving both K-Fed and Brangelina. Even with all that history, Kara was pretty complimentary, giving Bartz an A- in the management category and a C+ for financials. It looks like we’ll be able to tune in for the next few days and catch this ongoing judgefest. Kara moved on from the report card to a quick post declaring her love of network TV drama, and not the “Law and Order” kind. The fight over at NBC for late-night supremacy has been more hilarious than Leno or Conan. Maybe the solution is just to put some network execs on screen in that slot. Kara finished out the week with a conversation with recently departed RealNetworks (RNKW) CEO Rob Glaser. No, he isn’t dead, but he has decided to step down to look into other opportunities. Near as we can tell, they may have something to do with woolly mammoths.

Digital Daily was abuzz this week with the headline story of Google Labs adding yet another feature to Gmail. The new foreign policy tab enables Google (GOOG) to make better publicized international relations decisions than the Federal Government (and do so 20 percent faster if you’re running Chrome). Of course, it wasn’t all Google rattling China’s cage this week. John covered the party over at Intel (INTC) after the chip maker announced a blowout Q4. Finally, readers got a taste of capitalism at its best. Now you can get either America’s best network or America’s best smartphone (not both, of course) at a significant price cut. Thanks to pressure from Verizon (VZ), AT&T (T) dropped rates on certain calling plans.

Peter hit us with lots of video news this week, starting early with the potential partnership between Vudu and Wal-Mart (WMT). The world’s largest retailer seems to be thinking about getting into the Web TV business, or as it calls it, opening a supercenter in your house. Some might be watching for a rerun of the megaretailer’s failed shot at competing with Apple’s (AAPL) iTunes for music sales, but the Web TV space is wide open, so far. Also on the home entertainment front, Peter reported that it looks like Netflix (NFLX) may get a one-up from Nintendo fairly shortly if it can finalize a deal to add the Japanese game giant’s systems to the list of places you can stream its digital video content. Peter rounded things out with a little foreshadowing that YouTube, the Web video 800-pound gorilla, may be edging its way out of the red. Since acquisition, YouTube has never turned a profit, and Google execs have been muttering that they expect that to change shortly. What’s different this week? An industry analyst finally agrees.

If a moment of Mossberg just isn’t enough for you, then you are in luck this week as team Walt and Katie went all the way with three new installments of gadget wisdom. In Personal Technology, Walt reviewed the Sony Reader Daily Edition. While the big improvement to Sony’s (SNE) previous e-reader offering is the addition of wireless connectivity for remote download of articles and books (think Amazon Kindle’s “Whispernet”), Sony also upped the ante in form factor and interface. Overall, Walt was positive and felt the device was a strong offering. Mossberg’s Mailbox was overflowing this week with all kinds of questions from the Nexus One crowd. Walt picked three gems and clarified some points on measly app storage capacity, cell company coverage maps and the nitty-gritty on synching data between the phones and computers. Katie donned her gaiters and bravely waded into the weeds of search technology to shed some light on a major emerging trend—visual search. Both Google and Microsoft’s (MSFT) Bing are offering ways to search for things you can’t recall the name of, doing so by comparing images until you get that aha! moment. This stuff is complicated, but head on over to Katie’s article to figure out how it is going to change the search landscape.

Thanks for reading this week. Weekend Update wishes everyone as much good luck as we had making it out of CES Las Vegas alive.

Oh yeah, and a quick note to Siegfried: We may have one of your tigers, and also Roy.

Rob Glaser (pictured here) called BoomTown when he landed in Washington, D.C., only a few hours after he announced Wednesday he was stepping down as longtime CEO of RealNetworks (RNWK).

Digital Daily reported there was some contention between Glaser and the Real board around his departure from the Seattle-based company he founded 16 years ago, a move that has actually been in the works for some time.

While Glaser did say that he had been through the “most intense two weeks of my life,” leading up to that, he declined to comment more about the specifics of his leaving.

That was fine with me, because–although execs come and go in various and sundry ways–you simply have to give Glaser credit for his pioneering work in bringing both audio and video to the Web.

So Glaser and I talked about this and more, from what he thinks are the key highlights of his Internet career until now to what he plans to do next.

First and foremost, Glaser did “give the Internet a voice,” as I wrote in a 1998 profile of him for The Wall Street Journal about his company’s introduction of its first RealAudio product:

“RealAudio was greeted with more than a little disdain from the Internet elite because it was a tinny and unsatisfying experience for most users. But it gave the Internet a voice, and Mr. Glaser kept plugging away, improving fidelity and striking deals with more content providers to use it on their Web sites.”

Glaser said that was the simple idea behind Real, to “turn the Web from text and static links to a dynamic media space for the mainstream to enjoy.”

That effort began in earnest in the mid-1990s, he noted, by selling “tech enablement,” which simply meant hawking servers and software to companies interested in adding audio and, later, video, to their Web sites.

So successful was Real then that many big companies tried to buy it for huge sums. But ever the aggressive entrepreneur, Glaser never sold–unlike Mark Cuban at Broadcast.com–although many wished he had.

But that was simply not his style, he said; plus, business was booming and it was “like selling pickaxes during the Gold Rush.”

It is an apt metaphor since the next major moment for the company came when the Web 1.0 bubble burst in 2000.

“A lot of great–and also not so great–companies just died,” he said.

To avoid that fate, “We pivoted in a hard way to consumer services and avoided the tailspin,” Glaser added. “It was kind of like when the woolly mammoth evolved into an elephant, while the pterodactyl did not turn into anything.”

That meant creating a variety of consumer-focused media offerings that used Real technology, such as its casual games business and its Rhapsody music service.

Real also shifted its tech licensing business to a carrier services model, Glaser said.

He regularly tangled with Microsoft (MSFT), where he started his career as a very brash 21-year-old. The software giant targeted Real’s business, but also cooperated with the company at times.

And, while the games unit and Rhapsody hit some major bumps, Real did score a whopping $761 million antitrust settlement in 2005 from Microsoft.

But that win was some time ago, and Real idled too much, as did its stock, in the following years, even as Glaser plugged away at creating a variety of new businesses and strategies.

Some were off limits, he said when I asked him why he did not come up with a service like YouTube, given Real’s advantages in video early on, noting that his public company could never had created a service that so antagonized Hollywood partners.

But Glaser did just that more recently with one such innovative idea for a “legal” DVD ripper, called RealDVD.

Though very interesting, RealDVD hit the skids quickly when a federal judge last week dismissed Real’s claims against Hollywood studios seeking to shut down the service before it could be widely distributed.

While that specific defeat was not the reason for his leaving RealNetworks, the idea that it was time to bring new blood to the company finally gained traction with investors, the board, employees and, yes, Glaser too.

What the notoriously hard-charging executive–“My intensity sometimes manifested itself in less positive ways,” Glaser conceded in my 1998 interview with him–will do next is anyone’s guess.

Including his own.

Glaser noted that he would remain chairman of Real, although his day-to-day engagement there is now over.

“It is a big transition for me, because I am closing a chapter I have been in for a very long time,” he said, adding that he would probably do more philanthropic and political work.

(That’s no surprise. After all, Real was once called Progressive Networks, after his liberal politics, and Glaser once had a newspaper column called “What’s Left” while at Yale University.)

Glaser said that on the flight to Washington he thought about the advice Lotus founder Mitch Kapor, one of Real’s earliest investors, gave him when he left Microsoft and was thinking about his next step:

You should take time to figure out what you want to do next and know why you want to do it. Because if it’s successful, once you get going you won’t have time to think through those issues as clearly as you can now.

That’s pretty much been Glaser’s modus operandi over his many years at Real and in the larger Internet space: He pushed his vision of a live Internet forth, he never cut and ran, he never sold, he kept pushing forward.

And you have to admire that kind of gumption, no matter the outcome.

In any case, it is likely Glaser will keep doing so in the years to come.

In fact, pointing out that the movement of entertainment and content online has “come a long way, but still has an even longer way to go,” Glaser started rattling off ideas about where the online media sector needs to go in exactly the same fashion I described a dozen years before.

I described Glaser then as: “speaking in staccato bursts and radiating so much intensity that his face resembles a clenched fist.”

In other words, for all the the lively entrepreneur has been part of as a key pioneer in the development of the Internet, some things will never ever change.

If you want to see Glaser in action, check out these three videos of him, two from the fifth D: All Things Digital conference and one of him talking to me about RealDVD when he introduced it at Demo:

Session interview at D5

Demoing RealPlayer 11 at D5

Talking about RealDVD

]]> http://allthingsd.com/20100115/realnetworks-rob-glaser-talks-about-giving-the-internet-a-voice-and-yes-woolly-mammoths/feed/ 2 http://allthingsd.com/20100114/boomtowns-1998-rob-glaser-profile-a-web-pioneer-does-a-delicate-dance-with-microsoft/ http://allthingsd.com/20100114/boomtowns-1998-rob-glaser-profile-a-web-pioneer-does-a-delicate-dance-with-microsoft/#comments Thu, 14 Jan 2010 19:48:04 +0000 Kara Swisher http://kara.allthingsd.com/?p=23045

BoomTown did an interview last night with outgoing RealNetworks (RNWK) CEO Rob Glaser after the announcement yesterday of his departure from the company he founded and led for 16 years.

That will be posted later today, but here is a profile of Glaser I wrote after spending time with him in Seattle, when I was covering the Internet for The Wall Street Journal.

It’s from Feb. 12, 1998–yes, that means Rob and I are genuine Web antiques–and focuses on Glaser’s decidedly complicated relationship with his former employer, Microsoft (MSFT).

As you will see, it comes from a much different era of the Internet, when Microsoft was much scarier, RealNetworks represented innovation and the medium was still in its infancy. My favorite line is a description of Glaser as “radiating so much intensity that his face resembles a clenched fist.”

Here it is:

Rob Glaser learned the software business as one of Bill Gates’s most aggressive proteges at Microsoft Corp. So he knows all too well the anguishing strategic decision that most software entrepreneurs inevitably confront: Go head-to-head against Mr. Gates and risk annihilation. Or cooperate with him–and risk annihilation.

Now an Internet entrepreneur himself, Mr. Glaser thinks he has another strategy: A delicate dance with Microsoft that combines a little bit of competition and a little bit of cooperation.

His newly public company, RealNetworks Inc., popularized the use of realtime audio and video on the Internet’s World Wide Web. It already has more than 18 million registered users of its free “streaming” software for receiving multimedia over the Net. It also has a rapidly growing business selling server software for transmitting audio and video to Website operators.

But it stands squarely in the path of the strategy that has drawn Microsoft into trouble with antitrust regulators: Emulating innovative products, integrating them into its operating systems and then giving them away free. RealNetworks’ daunting task is to prove it can do a better job of outmaneuvering Microsoft than Netscape Communications Inc., the browser pioneer whose market share and profitability have been devastated by Microsoft’s integration strategy.

Mr. Glaser insists he and the software giant can coexist. “I learned an amazing amount from Bill,” he says, speaking in staccato bursts and radiating so much intensity that his face resembles a clenched fist. “We knew we could either compete head-on like Netscape or do something a lot more interesting.”

His strategy is known internally as “coopetition.” Out of mistrust, Netscape two years ago rejected an unsolicited offer from Microsoft to become a partner and investor. But Mr. Glaser approached his former colleagues last summer seeking just such an alliance. In July, he sold a nonvoting 10% stake to Microsoft for $30 million, and licensed RealNetworks’ technology to the software giant for another $30 million. Microsoft also agreed to bundle RealNetworks’ software with Internet Explorer.

In making the deal, Mr. Glaser helped himself to Microsoft’s cash and prestige and calculated that Microsoft wouldn’t consider streaming technology to be as strategic to its future as the browser.

“What we were trying to do in the partnership is to set it up so that our success would not disadvantage their core business,” Mr. Glaser says. “Microsoft is a very paranoid company and so we have tried to create an environment where while they might be covetous of some of our success, analytically they would not fear it.”

The deal gave Mr. Gates the opportunity, if he so desired, to clone RealNetworks’ products during the period when they were licensed to Microsoft. “There’s no question they could use our own technology to become extremely vigorous competitors and try to put us out of business,” says James Breyer, a director and member of Accel Partners, a venture-capital firm that helped finance RealNetworks.

So Mr. Glaser needs to stay ahead of Microsoft by rapidly improving his software, accumulating enough customers to become the standard for sending audio and video over the Internet and diversifying into related businesses.

Last month, for example, he announced an agreement with one of Microsoft’s archrivals, Sun Microsystems Inc., to finetune his software to perform better on Sun’s popular Internet servers than on Windows-based servers.

“They are neither friend nor foe, but Microsoft is most certainly the environment we live in,” says Mr. Glaser, now 36 years old. “It’s how we work within that environment that will make all the difference.”

Mr. Glaser’s own personality seems suited to the relationship’s contradictions. He has been a committed liberal since his days at Yale University, where he wrote a column called “What’s Left” for the student newspaper. He initially named his company Progressive Networks to reflect his politics. And he donated 700,000 RealNetworks shares to causes related to freedom of speech and environmental issues after the public offering, and promises to contribute 5% of the company’s future profits as well.

But he became a notoriously hardcharging and sometimes arrogant manager after he joined Microsoft in 1983, at the age of 21. Some colleagues dubbed him a “screamer.” When deadlines approached for projects, several former colleagues at Microsoft say he became increasingly revved-up, downing one Diet Coke after another and erupting at even tiny mistakes. “My intensity sometimes manifested itself in less positive ways,” Mr. Glaser concedes.

“Like Microsoft, Rob was smart, young, perhaps a little hard to take, and convinced he was absolutely right about a lot of stuff,” recalls Mike Slade, a friend of Mr. Glaser’s at Microsoft who now runs an Internet publishing company, Starwave Corp. “But that was what was rewarded at the company and everything was going too fast there for a lot of management training.”

The pace did take its toll. Even though Mr. Glaser rose to become vice president of multimedia systems and one of Mr. Gates’s favorites, his last years at Microsoft were rocky. Some at the company point to an internal power struggle with Microsoft’s head of technology, Nathan Myhrvold. “They both wanted to be Bill’s boy genius and visionary for the company,” says a colleague. “Obviously, Nathan won.”

Mr. Glaser dismisses tales of infighting, blaming his departure on a diminishing feeling of “joy” in his work. “I began to think that Bill had the best job of all,” he says. In 1993, at the age of 31, he resigned, with about $15 million of stock in his pocket.

His retirement didn’t last long. Soon after, he saw a version of the Mosaic browser, the first graphical interface software for navigating the Web. He had an epiphany, he says, realizing that the Internet could eventually become a major purveyor of audio and video.

Mr. Glaser sank about $1 million of his own money into a start-up that would first produce software for compressing and transmitting sound. With additional funding from friends, such as Lotus founder Mitch Kapor, RealAudio 1.0 quickly made its debut in April 1995.

RealAudio was greeted with more than a little disdain from the Internet elite because it was a tinny and unsatisfying experience for most users. But it gave the Internet a voice, and Mr. Glaser kept plugging away, improving fidelity and striking deals with more content providers to use it on their Web sites. The hook: Free player software for consumers.

He is attempting to repeat the process with RealVideo. It currently provides small, jerky moving pictures but will, he believes, someday transform the Internet as data transmission speeds increase. In a recent demo of the player, Mr. Glaser selected a music video by the languid singer Jewel, he joked, “because she doesn’t move around too much.”

Meanwhile, Microsoft has been developing its own Media Player and NetShow streaming software, partly with technology acquired by purchasing VXtreme, a RealNetworks competitor.

The Microsoft products are now free. But the company may decide to charge for the latest version of NetShow coming out this year, which would be good for RealNetworks. Meanwhile, Microsoft will continue to bundle RealNetworks’ player software with the Microsoft browser, also good for RealNetworks. And the day after RealNetworks’ Sun deal, Microsoft announced an agreement to make its own Media Player compatible with RealNetworks’ server software, yet another positive development for RealNetworks.

“The user only wants it to work,” says Rich Tong, a Microsoft marketing vice president. “So it is good business to work with RealNetworks to set standards for compatibility and expand the market for all of us.”

Skeptics assert that RealNetworks has forged only a temporary truce with Microsoft. Like Netscape, it must continually confront the challenge of trying to make money on technology that Microsoft gives away. RealNetworks charges $29.95 for an enhanced version of the player it gives away free, and $695 and up for its most powerful server software.

Some large companies are snapping the products up. Mercedes Benz, Eastman Kodak and Lockheed Martin are buying RealNetworks’ latest software, RealSystem 5.0, to bring their internal networks to life. Boeing Co., for example, uses RealNetworks’ software to communicate with employees world-wide and conduct training sessions. A variety of media concerns such as Metro-Goldwyn-Mayer, the Public Broadcasting System, AOL, Fox News’s 24-hour newsfeed and Paramount Pictures use it as well.

Mr. Glaser recently cut a deal with Macromedia Inc., the largest provider of animation-editing software, to transmit animated material over the Internet. RealNetworks is also operating multimedia Web sites for other companies, and has a joint venture with MCI Communications Corp. to create a broadcast network on the Web.

All these initiatives are running up big bills. Earlier this month, RealNetworks reported that revenue more than doubled for 1997, to $32.7 million from $14 million the year before. But heavy research and development spending tripled losses to $11.2 million, or 40 cents a share, from $3.8 million, or 14 cents a share. The company’s high costs, plus the looming threat of Microsoft, have depressed the stock, which hovers at around $16 a share, only slightly above the $12.50 a share it opened at when it went public in November.

But Mr. Glaser exudes confidence. His intense personality seems calmer these days. Once divorced, he now has a steady girlfriend and is traveling more frequently, including a summer trip to New Zealand, Australia and French Polynesia, where he made the decision to take RealNetworks public. His 13.5 million shares are worth $218.5 million. And he thinks he has Microsoft figured out. “People in Silicon Valley see things unnecessarily in black and white: You either hate Microsoft or you are a vassal of them. I am saying there is a third way.”

]]> http://allthingsd.com/20100114/boomtowns-1998-rob-glaser-profile-a-web-pioneer-does-a-delicate-dance-with-microsoft/feed/ 1 http://allthingsd.com/20100114/real-networks-share-price-no-longer-buffering/ http://allthingsd.com/20100114/real-networks-share-price-no-longer-buffering/#comments Thu, 14 Jan 2010 18:58:55 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=32717 Investors have met the decision of RealNetworks founder Rob Glaser to step down as CEO with a ringing endorsement. At $4.54, the company’s shares are trading over 17 percent higher on the news, which spiked the stock to a 52-week high of $4.59 Wednesday when it was announced.

Real’s (RNWK) share price Wednesday when we broke the news of Glaser’s departure? About $3.80.

Clearly, investors are hoping a shift in strategy will follow this sudden management reorganization and that it will transform Real into a more profitable company.

“There is clearly a lot of work still to be done at Real, but Glaser has set the foundation, leaving a pristine balance sheet, at least one business that is in great shape today (TPS), one that has tremendous value potential in the future (games), a couple of cash cows (RealPlayer, Superpass),” Morgan Keegan & Company Tavis McCourt wrote in a note to investors today.

“Glaser and Real management have also returned Rhapsody to a cash flow neutral position after years of significant losses, and based on an 8K, may be looking to divest more of its ownship in this business in the near term,” McCourt added. “In any event, there are plenty of opportunities for new leadership to create value from a base of some very unique businesses and capabilities.”

Indeed. First step: Unload Rhapsody and the games business.

]]> http://allthingsd.com/20100114/real-networks-share-price-no-longer-buffering/feed/ 0 http://allthingsd.com/20100113/rob-glaser-out-as-realnetworks-ceo/ http://allthingsd.com/20100113/rob-glaser-out-as-realnetworks-ceo/#comments Wed, 13 Jan 2010 20:50:56 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=32613

Rob Glaser is stepping down as CEO of Real Networks, the company he founded in 1994. Sources say the move was instigated by his own board, but that he cooperated with the decision and was involved in the transition.

Glaser will be replaced by Robert Kimball, a well-liked executive who most recently served as general counsel and executive vice president of corporate development at RealNetworks (RNWK).

Glaser, who will remain chairman of the Seattle-based Internet company, owns 38.4 percent of Real’s shares, making him by far the largest investor.

His move follows other significant news at Real: Last week, a federal judge dismissed its claims against Hollywood studios in the RealDVD case.

A few days earlier, COO John Giamatteo said that he would step down; the company announced that news yesterday afternoon.

But it is Glaser’s departure that is most important, given that he has been an innovative, pioneering and high-profile Internet leader for so long. Nevertheless, he eventually had to answer for problems with performance.

In fact, Glaser and the board had been talking for some time about making these changes, although it came much more suddenly than Glaser preferred, according to several sources. He had wanted to do a search for a new CEO before he left and make the shift less abrupt.

But the board–with the message coming from director Jonathan Klein, co-founder and CEO of Getty Images–felt a quicker change was needed.

“It’s a typical case of a founder and Internet visionary who can’t convert it to the bottom line. There was a great deal of admiration and respect for Rob, which delayed the decision, but eventually you can’t ignore the results,” says a person familiar with the company. “This move was a long time postponed, because he always had another good idea. But you have a staff whose options are all underwater, and the conversion of gross into net profit was not happening.”

It’s unclear when Glaser’s board informed him of the decision, but sources say that after processing the news, Glaser cooperated with and helped in the transition. He represented the company in a series of meetings at last week’s Consumer Electronics Show without letting on that he was on his way out.

He did, however, post an untypically melancholy message on Twitter yesterday:

Some Real employees and investors have had grievances with the company’s founder for years. A long string of former Real employees, for example, describe Glaser as a cantankerous boss, and Real’s stock price has withered since 2006, when it nearly broke the $12 mark.

The stock is now trading below $4.

And while Real was a genuine pioneer in Web video software and an early player in Web music services–the company was originally called Progressive Networks after Glaser’s political bent–it has been idling for many years.

For a while, for example, it was investing time and money in Web-based “casual games” and had filed to spin off that unit in 2008. But those plans were iced by the recession.

Meanwhile, RealNetworks split its Rhapsody music service into a joint venture with Viacom (VIA) unit MTV, but that service has also stalled, and the two partners have been trying to renegotiate the terms of their partnership.

Real’s crowning achievement of the past few years: The whopping $761 million antitrust settlement it won in 2005 from Microsoft (MSFT), Glaser’s former employer.

Here’s Glaser’s memo to his staff, followed by a note from Robert Kimball, and, finally, the company’s press release.

From: Rob Glaser
Sent: Wednesday, January 13, 2010 1:35 PM
To: All RealNetworks Employees
Subject: Important Personal News

Team,

Today we’re announcing something that I’ve been thinking about for a long time. Nearly 16 years after founding RealNetworks in 1994, I’ve decided to step aside from day to day operations. Accordingly, we’re announcing today that I am relinquishing my CEO job and will focus on my role as Chairman of Real’s board.

A decision of this magnitude produces a complex bundle of feelings. First, profound gratitude for the amazing colleagues I’ve had the opportunity to work with during a chapter that has turned out to be a third of my life. I am incredibly proud of the creativity, persistence, and commitment to excellence that our teams around the world bring to the table every day.

Second, deep appreciation for the billions (yes, billions!) of consumers that use or have used our products, the hundreds of millions of consumers that use our products every year, and the tens of millions of consumers that use our products and services every month. I am also grateful for the trust placed in us by our fantastic carrier and other distribution partners. Very few companies get to have the global reach and impact that we do.

Third, great confidence in the team that will be running the company day-to-day. As we kick off a search for my permanent successor, Real will be led by Bob Kimball as Acting CEO. Bob is one of the most passionate, hard-charging, and lucid executives I’ve ever had an opportunity to work with, and given his decade of leadership at Real, I am confident that the company won’t skip a beat.

Fourth, the bittersweet feelings that come from closing the book on a 16 year labor of love, emphasis on both labor and love. I feel very fortunate that as Chairman I will still get to carry the torch for everything that has made and will continue to make our company great.  And with 2 small children and a third on the way, I feel very lucky that the rhythm of my life can now change, at least for a time, to allow our family to do some things that might not otherwise have been possible. I also look forward to spending more time on civic and other projects outside of Real.

While there’s never an ideal time to make a change like this, this is as good a time as any. We’ve weathered the brunt of the Great Recession and have done what we said we wanted to do, which was to keep our core solid while also building for the future. We’ve also undertaken an extremely rigorous strategy review and have a very exciting road map for the future that you’ll hear about in the days and weeks ahead. And the start of a new decade is a good time, poetically, to pass the baton.

Thanks again for everything, and I hope to see all of you soon.

Rob

From: Robert Kimball
Sent: Wednesday, January 13, 2010 1:07 PM
To: Real@real.com
Subject: Important News

Dear Team,

Rob Glaser, our founder, has resigned as CEO effective today. Rob is sending out a separate note discussing his decision. While Rob will no longer have an operating role, he will continue to serve as Chairman of the Board. We look forward to continuing to work with Rob and I want to thank him for making RealNetworks what it is today and leaving us with a strong foundation upon which to build.

The Board has asked me to assume Rob’s executive responsibilities and has appointed me President and acting CEO. The Board of Directors will consider candidates for the permanent CEO role in the coming months. The senior executive team is galvanized and committed to making RealNetworks a company where customers love our products, employees are excited about being here, and we create value for our shareholders. We want RealNetworks to be a more focused, faster growing and profitable company. We are going to simplify the way we do business, empower employees to do their jobs, and hold people accountable for their results. I look forward to working with all of you to transform RealNetworks as part of this next chapter.

As part of transforming RealNetworks, I am personally committed to providing you with candid, clear and frequent communication so you know where we stand and where we want to go. In the coming weeks, we will be sharing with you changes in the way we operate and organize our business. And we want you to talk to us. Tell us when we are succeeding and when we are failing to make the changes necessary to transform. We plan to hit the ground running and we will need your help and input to succeed.

As you learned yesterday, John Giamatteo announced that he will be leaving in April to pursue another opportunity. John has built a great team here are Real and is completely supportive of the executive team going forward and will be working closely with all of us to ensure a smooth transition. Finally, I want to thank all of you for your contributions to RealNetworks. Our employees are our greatest asset and I humbly ask for your support and commitment to build our company into the great company we all know it can be.

Best to all,

Bob

REALNETWORKS’ FOUNDER ROB GLASER STEPS DOWN AS CEO

Company appoints Robert Kimball President and Acting CEO

SEATTLE–January 13, 2010 Digital entertainment services company RealNetworks, Inc., (Nasdaq: RNWK) announced today that founder Rob Glaser has stepped down as CEO. He will remain chairman of the board of directors of RealNetworks. The company also announced that its board of directors has appointed Robert Kimball president and acting chief executive officer. The board also appointed Mr. Kimball to the board of directors.

“After nearly 16 years, I’ve decided it’s time for me to step away from day-to-day operations,” said Glaser. “I’m grateful to all of our stakeholders–customers, partners, shareholders, and most of all, employees–for the support and commitment they’ve given to RealNetworks. I remain committed to the company and look forward to continuing to serve in my capacity as board chairman.”

In February 1994, Mr. Glaser founded what was then known as Progressive Networks, a pioneer in the field of digital audio and video technology for the Internet. Under his leadership, Real has grown into a multinational company, providing digital entertainment products and services to hundreds of millions of consumers around the world.

“Few people have changed an industry and created a unique experience for billions of people,” said Jonathan Klein, a board member of RealNetworks and the co-founder and CEO of Getty Images. “Rob has changed the face of digital entertainment with RealNetworks’ streaming media products. At the same time Rob has had a profound impact on politics and philanthropy. I’m sure he will continue to do this extraordinary work as well as spending time with his wife and young children. We are grateful for all he has done for the company, the industry and employees, and are pleased that he will continue to serve on the board.”

Bob Kimball joined the company in 1999 and has been a member of the senior executive team since 2003. He most recently served as general counsel and executive vice president of corporate development at Real. “In the decade he’s been at Real, Bob has proven to be an outstanding business executive and leader, and under his leadership the company won’t skip a beat,” said Mr. Glaser. “Our board has great confidence in Bob, and he will be a candidate for the permanent CEO position as part of a formal search process that will begin soon.”

“I look forward to the opportunity ahead,” said Mr. Kimball. “Real has a great team in place, a strong financial position, close customer relationships and fantastic products. We plan to transform Real into a more focused and more profitable company that delivers value to our shareholders.”

[Peter Kafka contributed to this report.]

]]> http://allthingsd.com/20100113/rob-glaser-out-as-realnetworks-ceo/feed/ 0 http://allthingsd.com/20100113/google-vs-china/ http://allthingsd.com/20100113/google-vs-china/#comments Wed, 13 Jan 2010 20:49:54 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=32652

]]> http://allthingsd.com/20100113/google-vs-china/feed/ 0 http://allthingsd.com/20100104/realnetworks-wants-a-convergence-play-just-like-everyone-else/ http://allthingsd.com/20100104/realnetworks-wants-a-convergence-play-just-like-everyone-else/#comments Mon, 04 Jan 2010 11:30:37 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=14647 Why did RealNetworks buy Varia Mobile, a software company best known for producing an MP3 player that sold poorly?

To work on a mysterious cloud-computing project, which has something to do with mobility and entertainment. That’s per TechFlash, which reported on the deal Sunday.

Probably best not to make too much of this one. Given that Real didn’t announce the deal (let alone report it to the Securities and Exchange Commission), it can’t be for much money (note that the last purchase Real bothered to announce was for $4 million). And the Lala deal aside, you can “acqhire” a group of engineers without laying out a lot of cash these days.

But it is a good reminder that RealNetworks (RNWK) wants to make itself a player in the next phase of entertainment–the one where you buy or rent the stuff over the Web and consume it wherever you want.

That’s at least partly why CEO Rob Glaser is still wrangling with Hollywood over his “RealDVD” system, which is supposed to let you rip copies of DVDs you already own. Because once you’ve done that, the next logical step is moving the file to your iPod or your tablet or just to different rooms in your house.

The problem, of course, is that everyone else wants to play there, too. And many already are in some form.

There are the hardware guys like Sony (SNE), who are selling TV sets and game consoles with Web connections, and cable guys like Comcast (CMCSA), who already control the pipe that brings the stuff to your living room. And telcos like Verizon (VZ), which want to do the same thing. And, of course, retailers like Apple (AAPL), Amazon (AMZN) and Netflix (NFLX), which are already selling digital entertainment. Etc.

During the first Web boom, it seemed Real would be in this list as well, since its back-end technology and its RealPlayer were commonly used to move entertainment around the Internet. Now the company is best known for its Rhapsody music service and its collection of casual games, but it doesn’t have pole position in either sector.

You’ll hear plenty more about this stuff over the next week at the Consumer Electronics Show, which kicks off Wednesday. But Real will probably be mum.

The company doesn’t have any announcements planned and isn’t renting space at the convention’s main show floor. Not a terrible idea to lie low at CES, where lots of people make a lot of noise about stuff that never comes to pass. But at some point, it will be interesting to see how Real plans to compete.

]]> http://allthingsd.com/20100104/realnetworks-wants-a-convergence-play-just-like-everyone-else/feed/ 0 http://allthingsd.com/20091110/the-judge-was-wrong-realnetworks-realdvd-appeal-document/ http://allthingsd.com/20091110/the-judge-was-wrong-realnetworks-realdvd-appeal-document/#comments Tue, 10 Nov 2009 23:48:40 +0000 Kara Swisher http://kara.allthingsd.com/?p=20484

RealNetworks just lobbed its appeal to the U.S. Court of Appeals in the case revolving around its DVD-copying software, RealDVD.

A U.S. District judge issued a preliminary injunction against RealNetworks (RNWK) in August to stop sales, and renewed it in October.

In a typical Hollywood move, the Motion Picture Association of America said the software, which allows copying of DVDs, violated the Digital Millennium Copyright Act.

In the appeal, RealNetworks said the judge was using the wrong law, that the software was not causing damage to the studios and that the technology is in the public interest and constitutes fair use.

“The District Court committed multiple legal errors in granting Appellees’ motions for preliminary injuction,” reads the appeal.

But, check out the whole appeal and below it, a video interview with RealNetworks CEO Rob Glaser that BoomTown did when RealDVD was launched a little over a year ago:

RealDVD Appeal

]]> http://allthingsd.com/20091110/the-judge-was-wrong-realnetworks-realdvd-appeal-document/feed/ 0 http://allthingsd.com/20091105/realnetworks-latest-layoff-memo/ http://allthingsd.com/20091105/realnetworks-latest-layoff-memo/#comments Fri, 06 Nov 2009 02:02:04 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=28331

Earlier today, Kara Swisher reported in BoomTown that RealNetworks (RNWK) would sack four percent of its workforce–70 employees out of its 1,700-person staff.

Below, the official internal memo from RealNetworks Founder, Chairman and CEO Rob Glaser, breaking the bad news:

Team–

I’m writing to share some important and unpleasant news with all of you. Today we are implementing a reduction in force primarily within our TPS and MSS divisions, as well as in a few of our shared services groups. Approximately 70 employees around the globe are impacted, which represents about 4% of our total workforce. Of these 70 employees, 51% are located within the US and 49% came from our international locations.

These staff reductions are a result of some trends and strategic decisions in our TPS and MSS businesses. I’d bucket the reductions into three categories–efficiency gains associated with eliminating or streamlining duplication of effort, businesses that have been impacted by the recession and/or cyclical downturns where we need to lower our costs and get more efficient, and slower growth businesses in which we have decided to reduce our investments so we can instead invest in areas with better growth prospects.

As a result of these changes being made today, the TPS and MSS divisions are now better positioned to continue to weather the economic storm in the short-term and to thrive and grow in the long-term. On behalf of everyone on the senior management team I would like to extend my thanks and appreciation to everyone being affected by today’s actions for their contributions to our company. We are offering all impacted employees generous severance packages and we are working closely with the affected teams to ensure a smooth and professional transition. Additionally, we are encouraging impacted employees to look for other roles within the company, and HR will assist them in this process.

Thank for your support and understanding.

Rob

]]> http://allthingsd.com/20091105/realnetworks-latest-layoff-memo/feed/ 0 http://allthingsd.com/20090824/youve-got-to-approve-the-app-steve-dont-be-pigheaded-ow-hey-stop-hitting-me/ http://allthingsd.com/20090824/youve-got-to-approve-the-app-steve-dont-be-pigheaded-ow-hey-stop-hitting-me/#comments Mon, 24 Aug 2009 22:47:52 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=23568 RealNetworks has submitted to Apple a free application that will bring its $15-a-month Rhapsody subscription music service to anyone with an iPhone or iPod touch and an EDGE, 3G, or Wi-Fi connection–assuming it’s approved by Apple, which is anything but a sure thing at this point.

Historically, Apple (AAPL) has shunned subscription music services, and fearing they might compete for dollars best spent on iTunes, made it impossible for them to interoperate with the iPod. A few months back, Apple would have likely done the same with Rhapsody, if only to tweak Real Networks (RNWK) CEO Rob Glaser, who infamously disparaged CEO Steve Jobs for his “pigheadedness” at the Digital Living Conference in 2005.

But things are a bit different today. With the Federal Communications Commission’s inquiry into Apple’s rejection continuing consideration of Google Voice for iPhone still fresh in its mind and the outcome of that inquiry still undetermined, Apple might be a bit more inclined to allow Rhapsody into the App Store. It certainly can’t withhold it by claiming it replaces core iPhone functions, as it did with the Google (GOOG) app.

And so we find Apple in a uniquely uncomfortable spot: Accept into the App Store an on-demand streaming music application that will compete for the attention of iTunes users or reject it and suffer further unwanted scrutiny by the FCC, not to mention a nasty public relations nightmare.

]]> http://allthingsd.com/20090824/youve-got-to-approve-the-app-steve-dont-be-pigheaded-ow-hey-stop-hitting-me/feed/ 3 http://allthingsd.com/20090824/youve-got-to-approve-the-app-steve-dont-be-pigheaded-ow-hey-stop-hitting-me-2/ http://allthingsd.com/20090824/youve-got-to-approve-the-app-steve-dont-be-pigheaded-ow-hey-stop-hitting-me-2/#comments Mon, 24 Aug 2009 22:47:52 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=23568 RealNetworks has submitted to Apple a free application that will bring its $15-a-month Rhapsody subscription music service to anyone with an iPhone or iPod touch and an EDGE, 3G, or Wi-Fi connection–assuming it’s approved by Apple, which is anything but a sure thing at this point.

Historically, Apple (AAPL) has shunned subscription music services, and fearing they might compete for dollars best spent on iTunes, made it impossible for them to interoperate with the iPod. A few months back, Apple would have likely done the same with Rhapsody, if only to tweak Real Networks (RNWK) CEO Rob Glaser, who infamously disparaged CEO Steve Jobs for his “pigheadedness” at the Digital Living Conference in 2005.

But things are a bit different today. With the Federal Communications Commission’s inquiry into Apple’s rejection continuing consideration of Google Voice for iPhone still fresh in its mind and the outcome of that inquiry still undetermined, Apple might be a bit more inclined to allow Rhapsody into the App Store. It certainly can’t withhold it by claiming it replaces core iPhone functions, as it did with the Google (GOOG) app.

And so we find Apple in a uniquely uncomfortable spot: Accept into the App Store an on-demand streaming music application that will compete for the attention of iTunes users or reject it and suffer further unwanted scrutiny by the FCC, not to mention a nasty public relations nightmare.

]]> http://allthingsd.com/20090824/youve-got-to-approve-the-app-steve-dont-be-pigheaded-ow-hey-stop-hitting-me-2/feed/ 0 http://allthingsd.com/20090812/realnetworks-still-barred-from-the-dvd-backup-business-why-does-realnetworks-want-to-be-in-the-dvd-backup-business/ http://allthingsd.com/20090812/realnetworks-still-barred-from-the-dvd-backup-business-why-does-realnetworks-want-to-be-in-the-dvd-backup-business/#comments Wed, 12 Aug 2009 19:16:55 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=9821 So now that the RealNetworks attempt to get into the movie-copying business has been rebuffed by a federal court once again, I’ve got a question: Why, exactly does RealNetworks (RNWK) want to be in the movie-copying business?

To recap: Real wants to sell a $30 piece of software called RealDVD that lets you rip and store DVDs on your computer. Real’s software adds its own set of locks to the ripped file to prevent DVD owners from passing along their files to someone else, but that isn’t nearly enough to placate Hollywood.

Real and the studios have been in court since last fall, when U.S. District Court Judge Marilyn Hall Patel issued a restraining order preventing Real from selling the software. Yesterday, Patel (whom you may recall from the old Napster days, when she essentially shut that service down) turned the restraining order into an injunction, along with a sharply worded ruling that basically described Real as a group of willfully obtuse doofuses.

Now Hollywood is dancing, and Real says it needs to “determine our course of action.” I have a suggestion for Real: Move on.

I know there’s a legitimate use for software that lets you rip DVDs you own–and more importantly, software that lets you circumvent the locks the studios put on their discs. But why not let the many other smaller companies fighting this fight, fight this fight?

Best-case scenario is that you end up with software that’s useful for a relatively small group of people: The ones who buy DVDs and want to watch them multiple times. Worst case is the one you have now: An expensive legal battle and the prospect of a product you’ll never be able to sell.

I’ve been puzzling about Real’s plan for this software from the get-go. Why release a product that is destined for a court battle?

A few people familiar with the company’s thinking have tried to explain that this fits into CEO Rob Glaser’s vision for Real’s future, which involves creating software that maintains a connected home entertainment hub. But that seems like a roundabout way to get there.

I have another theory: Glaser is a smart, pugnacious guy with a fondness for big public fights.

He spent some time in the earlier part of this decade jousting with Steve Jobs about Apple’s (AAPL) walled-garden approach to iTunes music, and lost that one. But he did get Microsoft (MSFT) to hand over $760 million to settle an antitrust case in 2005, and he still has a chunk of that cash in the bank.

Or maybe there’s an entirely different impulse behind RealDVD. But whatever it is, I’d love to hear it. Here’s a clip of Rob Glaser explaining the software’s features, but not the rationale behind it, to BoomTown’s Kara Swisher:

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