Microsoft has been developing its own hand-held music and video player to challenge Apple Computer's iPod and expects to have it in stores in time for the holiday season, entertainment industry executives briefed on the company's plans said last night.

Microsoft's digital device would be equipped with at least one feature the iPod lacks: wireless Internet capability that would allow users to download music without being connected to a PC.

Microsoft's device, which is similar to an existing player that uses the company's software, would also have a more advanced video screen, according to the executives, who did not want to be identified because they were not authorized to discuss the device.

The company has also held negotiations, the executives said, with major record companies and some major television networks in order to settle on terms that would allow it to sell music and video content online through a service similar to Apple's iTunes Music Store.

News source: New York Times