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The world's largest mobile phone maker Nokia will license Microsoft's PlayReady digital rights management (DRM) technology, and build it into its S60 software, the most widely used software platform in the industry.

Microsoft's technology allows people to share protected pieces of content - such as music, games or videos - between mobile phones, PCs and other devices.

Nokia's S60 software is used extensively in Nokia's line-up, but also in phones made by LG Electronics and Samsung Electronics. Its closest rival is Microsoft's own Windows Mobile.

In 2005 the two companies signed their first co-operation agreement to take Windows Media player on to Nokia phones, raising many eyebrows as the two had been fierce competitors in the mobile software industry.

As mobile phone prices decline, handset vendors are looking for new revenue from potentially lucrative software operations,

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while at the same time Microsoft is looking for new revenue from the mobile space.

In June, Nokia said it would reshape its whole organisation to better focus on software and services.

TV breakthrough?

Music has been the main driver for mobile entertainment so far, but new boost to the market is expected from the breakthrough of mobile television broadcasts.

"Can it get better and move to the mainstream? absolutely," claims Chadd Knowlton, general manager for content access and protection at Microsoft. "Mobile television, that's going to be much more mainstream thing than today's entertainment features."

Microsoft and Nokia said they would also work together to enhance and simplify consumer access to digital content using mobile devices.

Nokia is widely expected to launch an online music and mobile content store, a rival to Apple's iTunes, in coming months, using technology gained from last year's acquisition of US digital music distributor Loudeye.

Sebastian Nystrom, a director at Nokia's technology unit, declined to comment on the possible impact the Microsoft deal could have on services built on the Loudeye acquisition, but said: "PlayReady will be the key component in offering such services to consumers."

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