Nokia, Microsoft to boost mobile entertainment

(Adds analyst quotes, background)

By Tarmo Virki

HELSINKI, Aug 6 (Reuters) - Mobile-phone giant Nokia (NOK1V.HE) will start to use Microsoft's (MSFT.O) copy protection software to boost the use of wireless entertainment, like music and videos, the two companies said on Monday.

Microsoft's technology allows users of Nokia cellphones to share protected pieces of content -- like music, games or videos

-- between phones, PCs and other devices. -- between phones, PCs and other devices.

Nokia, the world's largest cell-phone maker, 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 cell-phone industry.

Nokia's S60 software, built on UK-based mobile phone software firm Symbian's operating system, is used extensively in Nokia's line-up, but also in advanced cell phones of LG Electronics (066570.KS) and Samsung Electronics (005930.KS).

Its closest rival is Microsoft's own Windows Mobile, but analysts said the deal should benefit both.

"It is in both (companies') interest that there is compatibility between the two and content can flow between devices," said Geoff Blaber, senior analyst at consultancy CCS Insight.

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

As cellphone prices fall, handset vendors are looking for new revenue from potentially lucrative software operations, 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.

Nokia said it expects many S60 and its lower-tier Series 40 phones, which are also included in the deal, using PlayReady technology to hit the market in 2008.

"This takes it to a huge portfolio of Nokia devices," CCS's Blaber said. "The deal makes perfect sense for Nokia. There isn't so comprehensive a DRM solution available for mobile space."

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