Philips partners with Rhapsody for digital music (Reuters)

LAS VEGAS (Reuters) - Dutch electronics group Philips is forming an alliance with digital media company RealNetworks to offer online music using Philips music players, the two companies said on Sunday.

Philips, which is redefining its consumer businesses as a broad "lifestyle" company, said it would start selling portable and home audio devices compatible with the Rhapsody subscription service early this year.

Rhapsody, a joint venture between RealNetworks and Viacoms MTV Networks, is a distant rival to Apple Incs iTunes online music store. It also faces competition from Microsofts Corps Zune Marketplace.

Philips joins SanDisk Corp, Nokia Oyj and Chinas Haier Group

in making portable music players that work with Rhapsodys subscription service, which starts at 12.99 a month and includes personal recommendations and themed playlists.

"We have identified an opportunity to deliver high quality music content to consumers both at home and on the go," said Wiebo Vaartjes, General Manager, Audio & Multimedia Applications at Philips Consumer Electronics.

Apple, which has sold more than 100 million iPods since its launch in 2001, dominates the MP3 digital music player market with a share of about 80 percent.

Still, about three out of four households do not yet own a digital music player, leaving room for rivals.

Philips is previewing its new, Rhapsody-compatible GoGear portable music players and Streamium home audio products at the Consumer Electronics Show in Las Vegas, which gets underway on Sunday.

The Dutch company recently wrapped its struggling consumer-electronics business together with its home-appliances unit to form a new division called Consumer Lifestyle. Its other main businesses are lighting and hospital equipment.

On Sunday, Philips -- the last remaining major European consumer-electronics maker -- also launched a new line of TVs and video and audio players designed to appeal to consumers fed up with the technology-dominated feel of many appliances.

The minimalist "Design Collection" features curved lines and light materials, and will include products in all price ranges.

"Consumers are frustrated and confused by the so-called sea of similarity, where all products look alike -- masculine, technical and monotonous," said Andrea Ragnetti, chief executive of Philips Consumer Lifestyle division.

Philips Consumer Lifestyle Chief Technology Officer Johan van de Ven told Reuters: "We want to give ourselves a different face in the market."

(Reporting by Georgina Prodhan, editing by Phil Berlowitz)