The foundation of the relationship with Microsoft has multiple aspects. So interoperability is one thing, and if everyone agreed on interoperability, it might be less of a rallying cry, but it would still be very important.
If the question is, was this an example of "The enemy of my enemy is my friend"? I would say no — it's much more multidimensional and nuanced than that. If the fact is that Apple is a company that is not very open, and that's something that might motivate people to find ways to work together, that's just human nature. But it's not a simple Hatfield-McCoy kind of thing; it's more multidimensional than that.
How do you think this positions you and Microsoft jointly against Apple, at this point?
With regards to services for consumers, which is our focal point, I
think it positions us both extremely well. I think the missing link, at
this point, is hardware that a consumer finds compelling, in terms of
the portable-music category.
For the portable space, I think it's fair to say that the iPod is still the best product. I think we and Microsoft have an incentive to work with the hardware community to create better solutions than have been created thus far, and I think we'll do it, but I think that is something that plays out over time.
This Christmas, the iPod will be the biggest seller, no matter what, and I think odds are good it will be the biggest seller next Christmas. I'm hopeful that next Christmas, by '06, there will be a worthy competitor from the device side, but we have to get our brethren in the hardware business to help us on that one.
The deal seems to be mostly about music and games. How does this affect Real's other businesses?
In terms of our systems business, it's very helpful. One of the things
we can now offer our...
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I'm guessing someone didn't read the fine print.
But that will show within a couple of years.
As things look now Harmony looks promising as an additional vehicle to get DRM pushed around and it seems Microsoft wants to invest in that.
Now why would a very rich company like Microsoft want to invest in pushing DRM? To make a small profit out of it perhaps? Or a much bigger profit based on proven internal business tactics like Windows and Office have shown?
Time will tell.