SanDisk, RealNetworks Team on iPod Challenger

RealNetworks is hoping to make a stronger push into the portable digital music market with the introduction of SanDisk’s Sansa music players that come bundled with RealNetworks Rhapsody music service.

The new offering, announced on Monday and to be available only in the United States, means that Real and SanDisk join Apple Computer and Microsoft as providers of music services that are closely tied to specific devices. Just last week Microsoft revealed details of Zune, which will link a new portable player to a Microsoft digital music store.

As part of the deal, the Sansa e200 series of portable music players will come preloaded with software supporting the Rhapsody service. Subscribers to the service pay a monthly fee to listen to any song in the Rhapsody database. They can download songs to their PCs and transfer them to the digital music player.

If users cancel their subscription, the next time they connect to the Internet they’ll synch with Rhapsody, which will delete the songs from the music player and their PCs. Anyone can buy individual tracks from Rhapsody, and those songs won’t be deleted for customers who cancel their subscriptions.

Rhapsody To Go customers can already transfer music onto portable players, but this will be the first time that a device will come preloaded with Real software to ease the song transfer.

The service on the Sansa device will also include some new capabilities, including automatic downloads of songs based on user preferences.

Real is using its own Helix digital rights management rather than Microsoft’s PlaysForSure offering, although the devices will support the Microsoft technology.

"This shows how the marketplace is slowly adjusting to Microsoft becoming a competitor," said Mark Mulligan, an analyst with Jupiter Research.

Many portable music manufacturers and digital music stores have used Microsoft’s digital rights management software and the Windows Media platform, but their relationships with Microsoft may be tested since the introduction of Zune.

"There’s going to be significant amounts of shifting of alliances, because what Microsoft has done with Zune is become an aggressive competitor with lots of people who were their clients who use Windows Media," he said.

The announcement from Real also indicates that although the industry has become increasingly critical of Apple’s policy of tying iTunes customers exclusively to its own iPod music players, competitors are emulating the tactic.

Still, just because Microsoft and Real have now introduced similar concepts doesn’t mean that such close bundles will become the only choice in the future, Mulligan said. That’s clear because the Real and SanDisk relationship isn’t exclusive, meaning that Sansa users won’t be limited to using only Rhapsody, while Real said it plans to form similar relationships with other music player makers.

Also, if the music stores strike too many relationships with music player makers, the value of the close tie-in drops. "You can only do that so many times before it becomes meaningless," Mulligan said.

Real said the Sansa offering will become available later this year. The companies did not reveal pricing for end users.

-Nancy Gohring, IDG News Service (Dublin Bureau)

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