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No. 1 software maker, Microsoft Corp., and the U.S.' No. 3 wireless telephone firm, AT&T Wireless Services Inc., on Wednesday said they formed a partnership to provide data services through wireless devices to corporations.

Under the deal, the two companies will develop and distribute Microsoft Windows operating system powered Pocket PCs, laptops and smartphones, which combine the capability of a personal digital assistant and telephone.

The companies said they plan to launch their first set of services and devices in the fourth quarter.

News source: Reuters - Microsoft, AT&T Wireless Sign Data Deal

Maverick Middelhoff

Middelhoff, considered a maverick at the conservative media giant, was forced out over the weekend, with the Gutersloh, German-based company citing differences of opinions on strategy.

He was focused on modernizing the company, which owns book publisher Random House, Pan-European broadcaster RTL Group SA, and BMG Entertainment, which includes RCA Records and Arista Records. He reportedly was aiming to take the company public in 2005 and he oversaw the acquisitions of music retailer CDNow and MyPlay, an online music storage service.

"I thought Thomas was an aggressive guy who took risks and tried to establish a clear vision," said Hilary Rosen, chief executive of the Recording Industry Association of America (RIAA). "He wasn't a great listener, though."

Bertelsmann's investment in Redwood City, California-based Napster was one of Middelhoff's more controversial moves.

"Middelhoff upset the status quo at BMG when he purchased Napster," said Tess Taylor, president of the National Association of Record Industry Professionals. "Napster has been sidelined not only by all the lawsuits, but by competitors. Even if they were able to revive it, Napster would have a lot of catching up to do."

Napster irked the recording companies by providing a way for people to share songs with each other. BMG Entertainment, along with Vivendi Universal, Sony Corp., AOL Time Warner and EMI Group Plc sued Napster in 1999 for enabling copyright infringement with its service. (AOL Time Warner is the parent company of CNN.com.)

A U.S. federal judge ordered Napster in July 2001 to shut down its service while the lawsuit proceeded. The service had about 60 million users worldwide at the time.

Napster faces lawsuits, rivals

In the meantime, Napster has been developing a subscription-based commercial service and trying to get the labels to license their songs.


Bertelsmann invested in Napster in October 2000 and in May 2002 agreed to acquire Napster outright. As part of the deal, Napster filed for Chapter 11 bankruptcy protection.

Bertelsmann has reportedly spent about $80 million keeping Napster afloat. Napster will still have to pay damages and royalties to the record companies before it can relaunch.

BMG also has invested in a fee-based online music service, MusicNet, with EMI, AOL Time Warner and RealNetworks Inc. that competes with a similar venture from Sony and Universal Music called Pressplay and rival Listen.com.

Those services face tough competition from free services that cropped up in Napster's wake, including KaZaA, Morpheus and Audio Galaxy, which will be harder to shut down since they don't have a centralized directory like Napster did.

Online music at risk

Experts said the future of online music itself is in trouble. Earlier this month, AOL Time Warner Chief Operating Officer Robert Pittman and Vivendi Universal Chief Executive Jean-Marie Messier resigned under pressure.

In July, Andy Schuon resigned as chief executive of Pressplay. At Bertelsmann, Andreas Schmidt, head of BMG's electronic commerce group and the man who oversaw the Napster deal, left late last year.

"This is an environment where you're competing against wholesale piracy and media companies don't have a lot of discretionary money available," Rosen said. "So, it's an uphill battle."