Microsoft to Take On Apple iPod

NEW YORK (Reuters) – Software giant Microsoft Corp. is laying the groundwork to compete against Apple Computer Inc.’s iPod digital entertainment device and iTunes service, sources familiar with the discussions and plans said on Friday.

Microsoft has held licensing discussions with the music industry to create its own music service, the sources told Reuters.

The Redmond, Washington-based developer of software that runs most of the world’s PCs is also demonstrating an entertainment device that plays videos and music, the sources said.

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