There's a Wired story about Real's competent hacking job here which says:
Apple said in a statement it is "stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod." Once its iPod software is updated, Apple said, it is unlikely that RealNetworks users will be able to use the newer version.
My personal take on it is this: Real wouldn't have done this if they weren't desperate. It was a gamble they had to take because they had no better options, and they couldn't just throw in the towel without a fight, however unlikely it is that they will win. They will have a lot of trouble keeping up with Apple's defensive moves, and even if they continue to succeed at hacking the iPod, few will care very much.
Real is going down.
Not so long ago, there was no iTunes or iPod. There was QuickTime, which was a codec competing with Real's and Microsoft's. QuickTime was in third place. A reporter had heard that Steve Jobs had a personal vendetta to destroy Real, because he thought QuickTime should have Real's place in the scheme of things. When told of this rumor, Jobs said something like "There's nothing personal -- it's all just business."
However that may be, it is interesting to see events play out.
An article on the conflict in Forbes. A lot of people have the feeling that Apple should not fight this move by Real. I understand the reasoning. Apple's music play is supposed to be about selling iPods, and they supposedly don't particularly care about making money directly off of music sales. So why not open up the iPod to music sold by Real? It could only help them sell more iPod's right?
I assume that Apple has serious hopes of being the Microsoft of Music, and they think their chances of doing that increase if they own the store as well as the player. I don't know if that reasoning is correct or not. I tend to assume they have thought about this very seriously and are not being stupid, and can and will change their plans if market conditions indicate that they should. I think they're "going for it" but will intelligently change their strategy if they can't actually get it. After all Steve Jobs has been through, I don't believe he's so stupid as to bullheadedly and inflexibly "need" to own everything for reasons that have only to do with his own dumb ego and stubbornness -- which is what people frequently assume is the reason Jobs makes decisions.
In any case, my position on Real is unchanged, although it is true that they could fare a bit better if Apple changes its mind decides to let them in.