Is AOL, Microsoft Bundling Bad News for RealNetworks?

AOL and Microsoft may be in the process of burying the hatchet, and the
loser may be RealNetworks, according to a report by BetaNews.

AOL Time Warner’s AOL client has long had a home bundled with Microsoft’s
Windows OS. But the original agreement ended Jan. 1, 2001, and the two
companies failed to reach a compromise that would extend the agreement. Now
BetaNews reported Friday that AOL representatives were invited to Redmond
for a three-week integration session at the end of May — a session which
should lead to the inclusion of Steppenwolf, the XP-compatible version of
AOL 6.0, in the October release of Windows XP.

Steppenwolf is reportedly the same as AOL’s current 6.0 release, but must
meet strict XP requirements for compatibility and size. BetaNews reported
that AOL requested about 84MB of CD space for its various client languages,
while Microsoft only has 70MB available. The two companies are reportedly
exploring ways of reducing the size, including use of a single installer for
various languages and removal of components such as the RealPlayer.

RealNetworks just recently launched MusicNet as a joint venture with AOL
Time Warner, and the two companies have an exclusivity contract. But the
relationship between the two companies has not been rosy, according to
reports. RealNetworks recently refused an AOL request to slim down the
RealPlayer software.

The exclusivity contract between RealNetworks and AOL ends mid-July and AOL
is likely to integrate Windows Media Player with Steppenwolf by May 31.
According to BetaNews, Windows Media Player will initially launch only for
Windows Media formats but AOL is considering the implications of an
exclusive contract with Microsoft.

However, AOL and Microsoft still have issues to iron out. First, AOL has
failed to meet Logo requirements and WHQL certification for Windows XP,
according to BetaNews. AOL officials will reportedly take another jaunt to
Redmond to cross those t’s and dot those i’s.

On AOL’s end, the company is somewhat dismayed by Microsoft’s new OEM
policy, which outlaws the use of desktop icons.

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