LAS VEGAS (Reuters) - Dutch electronics group Philips is to partner digital media company RealNetworks in online music in a move to bolster its position in North America and help revive RealNetworks music business.
Philips and RealNetworks will offer a unified music download service to home audio systems as well as portable music players from a single provider, filling what they argue is a gap in the market.
The two companies plan to launch the Rhapsody service for Philips devices in North America around the end of the first quarter, executives said at the Consumer Electronics Show in Las Vegas on Sunday.
They said they had learned from Apples winning combination of the hit iPod music player and the iTunes online music store that has made Apple by far the market leader, while offering consumers more by bypassing the PC for music at home.
"You need very tight device-service combinations, and Apple has proven this," RealNetworks head of consumer business development, Matt Rowlen, told Reuters in an interview.
Customers will need either a Philips home audio system or a box to attach to their existing system to have music they select from the Rhapsody subscription service downloaded simultaneously to their PC and home stereo.
The Philips MP3 music players that will make up the full set will be priced "very aggressively" at about 109 to 199 for 4 gigabyte or 8 GB versions, Philips Consumer Lifestyle strategy chief Kevin Lewis told Reuters. This is enough for up to about 2,000 songs.
BRUTALLY COMPETITIVE MARKET
The partnership is Philips first major cooperation with a media company and part of its new self-styled image as a consumer lifestyle company.
"For years in consumer electronics theres been too much focus on electronics and not enough on consumers," Andrea Ragnetti, head of Philips new Consumer Lifestyle unit, told a news conference launching a range of video and audio gear.
The "Design Collection" features TVs, DVD players and music systems with curved lines and sleek materials that Philips hopes will appeal to customers turned off by boxy, masculine devices.
Lewis said the Rhapsody deal would bolster Philips in North America, where the company lags other regions and has said it may exit some businesses.
He declined to say whether Philips would give up trying to sell low-cost TVs in North America, where it is struggling to compete with the top-selling Vizio LCD TVs of Taiwans Amtran
Lewis did say, however: "North America is a brutally competitive market. Thats particularly true of TVs. This industry continues to be wonderful in some ways and a tragedy in others. Its a train wreck in many ways."
REALNETWORKS MUSIC REVIVAL?
For RealNetworks, which has never fully recovered from a battle with Microsoft that hurt its once-promising media player business, the deal could help kickstart a revival of its floundering music business.
RealNetworks has survived recent years through a growing business in mobile entertainment and games thanks to acquisitions financed by a 761 million legal settlement from Microsoft in the media player dispute.
"Music is a very thin-margin business," RealNetworks Rowlen said.
The expanded Rhapsody service in North America will also be boosted by Viacom, which has pledged 300 million worth of advertising through its media outlets after its MTV Networks signed up to a joint venture with RealNetworks last year.
(For more from the Consumer Electronics Show, please visit the MediaFile blog: http://blogs.reuters.com/mediafile/ )
(Editing by Phil Berlowitz & Ian Geoghegan)
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