1. Systems Engineering Manager
GUEST SPEAKER
Thursday, February 15
Wayne Myamoto
Systems Engineering Manager
Cisco Systems
Topic:
“New Internet Technologies”

2. Key Success Factors
Technology
Distribution
Relationships

3. Technology Changing the standard--core competence
Proprietary streaming technology
Targeted audio technology vs. video
Timing
Piggy-backed advertising and Internet craze
Beta testers

4. Distribution Ensured high quality Consumer readiness
Timing--educated public
Predicted the market well
Thought leadership
Made it easy for customers to use
Gave away client-side software (switching costs)

5. Relationships Quality, Reliability, and Speed Reputation
Value, trust, and convenience
Reputation
Targeted larger customer base (non-techies)
Brand
Loyalty - decreased acquisition costs
Partnerships--> Advertising/ Content

6. Real Networks, Inc. Real Broadcast Networks Content Context
Streaming Software
Infrastructure

7. Key Risk Factors Disruptive Technology Channel Conflicts
Decreased Distribution Capability
Getting “Leap Frogged”
Resource Allocation
Competitive Dynamics
Microsoft’s response

8. Trade-offs in RealNetworks’ Strategy
Pros
Diversification of Risk
Full-Integration
Cons
Competition with Customers
Spread too Thin
Microsoft Could Take Advantage of License Agreement

9. RealNetworks Revenue Model
Revenue Description Example
Product sales Sell or license physical or Sell and license streaming
information-based product media products
Advertising Market other company’s Advertising on website,
products or services carrying special promotions,
Programming content
Subscription fee Charge for regular receipt Selling annual upgrade
of products or information subscription
Commission or Agent, broker, or intermediate Programming customers
Transaction fee charge. Can be a set fee or pay transaction fee based
a % of cost on viewers
Consulting and Charge for services provided Services to design/develop
service fee Set or variable streaming media content
Membership fee Charge to belong to a group None

10. Follow-Up June 98 Microsoft partner with broadcast.com
July RealNetworks charged that Microsoft’ WMP had sabotaged
its RealPlayer in the US Senate Judiciary Committee’s hearing
on the Microsoft’s anti-competitive business practices.
Nov Microsoft announced:
“Though the companies have achieved some initial
interoperability, RealNetworks and Microsoft have
decided to accelerate their innovations and impro-
vements in different directions.”
Microsoft to pull out $140 Million+ from RealNetworks

11. Follow-Up
April Microsoft won’t include RealNetworks toolbar in IE 5.0
Yahoo! bought Broadcast.com ($5.7 Billion)
Yesterday Larry Jacobson, former president of Ticketmaster and
former president of FOX Television Network, named
President of RealNetworks.
Product: PC wirelessly sending Internet media to
other consumer devices in a home
Today RealNetworks has 125 Million subscribers
and over 60% of market share

12. THE PRIMARY OBJECTIVES OF
THE REALNETWORKS, INC. CASE STUDY WERE:
1. TO DESCRIBE INTERNET STREAMING MEDIA, AND ITS
MARKET OPPORTUNITY.
2. TO PROVIDE AN ILLUSTRATION OF A FIRM THAT
IDETIFIED A NEW TECHNOLOGICAL OPPORTUNITY,
AND ISSUES RELATED TO HOW TO PROVIDE VALUE.
3. TO EXPLORE THE CHALLENGES FACE BY MANAGERS IN
DESIGNING, BUILDING, AND GROWING A SUCCESSFUL
INFORMATION AGE BUSINESS.
(COMING UP WITH A GREAT IDEA IS JUST THE FIRST
STEP IN THE PROCESS…)