Bloomberg News

FRIDAY, JUNE 2, 2006

TOKYO Microsoft is developing portable music players with NTT DoCoMo, Toshiba and other Japanese companies to compete against Apple Computer`s iPod.

Microsoft is working with eight companies in Japan to offer audio players and content that is compatible with the Windows Media Technology operating system, Microsoft said late Wednesday. Napster Japan, NTT Communications and Aoyama Capital will provide content and other services, the statement said.

The partnerships may challenge Apple`s dominance in Japan`s ¥34.3 billion, or $306 million, Internet music download market. Microsoft`s link with DoCoMo, the largest mobile phone company in Japan, and the electronics maker Toshiba may give its music software and media business a bigger foothold in Japan, where more people access the Internet from mobile phones than from personal computers.

The value of music downloads in Japan rose to ¥10.5 billion in the fourth quarter of 2005, up 58 percent from the beginning of the year, according to the Recording Industry Association of Japan. Mobile phones accounted for 94.3 percent of all music downloads in the year.

Apple`s iTunes is the world`s most- used online music store, and the iPod is the most popular portable music player.

Microsoft said it had begun a two- month campaign this week at Japanese electronics retailers showcasing portable music players or mobile phones from DoCoMo, Toshiba, Victor Co. of Japan, iRiver Japan and Creative Technology. Users will be able to transfer music and video files from their computer to the portable gadgets and mobile phones.

Windows advances in China

The number of PCs sold in China containing legal copies of Microsoft`s Windows operating system doubled in the first quarter from the fourth, as major vendors joined a campaign to stamp out piracy, Reuters reported from Shanghai.

About 48 percent of PCs shipped in China in the three months through March came with legal copies of Windows already installed, compared with 25 percent in the fourth quarter of 2005, according to figures supplied from the data-tracking firm International Data Corp.