RealNetworks is defiant this morning, defending itself against Apple's warning shot over its Harmony technology.

Harmony - which the company introduced earlier this week - is software that lets music acquired from Real's online music store to play on iPods, poking a hole in Apple's closed music ecosystem. Real this week also said it is talking to potential licensees for the solution.

Apple yesterday said: "We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod."

Real this morning dismissed Apple's allegations. The development: "Follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility," the company said.

Multimedia market message

Real's once ubiquitous multimedia software recently fell behind QuickTime in terms of market share for the first time: A recent report from research firm Frost and Sullivan said QuickTime now holds 36.8 per cent of the media player market; RealPlayer 24.9 per cent and Microsoft Windows Media 38.2 per cent.

The company this week announced a second quarter net loss of $4.6 million. Much of this loss is attributed to an expensive legal action Real has begun against Microsoft, which it accuses of unfairly trying to promote its own multimedia software.

In an attempt to boost confidence, RealNetworks CEO Rob Glaser told investors: "We're firing on most of our cylinders".

All cylinders

Apple legal may well be too. A statement released yesterday warned Real: "We are investigating the implications of Real's actions under the Digital Millennium Copyright Act (DMCA) and other laws."

Real instead alleges: "There is ample and clear precedent for this activity, for instance the first IBM compatible PCs from Compaq. Harmony creates a way to lock content from Real's music store in a way that is compatible with the iPod, Windows Media DRM devices, and Helix DRM devices. Harmony technology does not remove or disable any digital rights management system," the company cried.

On Apple's warning that it may invoke the DMCA, Real said: "Apple has suggested that new laws such as the DMCA are relevant to this dispute. In fact, the DMCA is not designed to prevent the creation of new methods of locking content and explicitly allows the creation of interoperable software.

"We remain fully committed to Harmony and to giving millions of consumers who own portable music devices, including the Apple iPod, choice and compatibility," said the company.

Apple says 'don't get Real'

It may not attract too many iPod-owning shoppers to its digital doors in the first instance, as Apple has also warned: "We strongly caution Real and their customers that when we update our iPod software from time-to-time it is highly likely that Real's Harmony technology will cease to work with current and future iPods."

Real isn't above using the dispute to promote its RealPlayer Music Store, which it describes as offering "the highest sound quality of any download service".

"Consumers, and not Apple, should be the ones choosing what music goes in the iPod," Real said.

Analysts see little major significance in Real's activities. Forrester Research analyst Josh Bernoff said: "The most important battle is between Apple and Microsoft."