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Intel and Bertelsmann to Develop Technology

From Reuters

Chip maker Intel Corp. and media conglomerate Bertelsmann plan to cooperate in developing technology for downloading and sharing films, music clips and games from the Internet.

Intel will make chips for PCs, notebooks and mobile phones that are compatible with a new online media file-sharing platform from Bertelsmann’s services and technology arm, Arvato, capitalizing on the huge and growing public appetite for accessing music and other media online.

“One of the major environmental changes in the electronics industry is this convergence: a combination of computing, communications and content,” Intel Chief Executive Craig Barrett said Wednesday. “This thing we call the digital home really is the combination of all three of those things.”

The deal represents a surprising alliance between two of the largest players in the media and technology industries, which have clashed in recent years because consumers have used cutting-edge products to copy billions of movies and songs without paying for them.

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On Tuesday, the U.S. Supreme Court heard arguments on whether peer-to-peer software makers should be held liable for the millions of copyrighted files their users download each day.

Through a trade group, Bertelsmann’s music company has pressed to shut down software makers such as Grokster and Morpheus, while Intel has sided with other technology companies that fear anti-piracy efforts could deter the next generation of innovative products such as Apple Computer Inc.'s iPod music player.

But Bertelsmann also has shown more flexibility and daring than its peers.

The company struck an alliance with file-trading network Napster in 2000 at a time when its own record company, BMG, was seeking to shut it down, and said in November that it was in talks with Grokster to develop a legitimate peer-to-peer service.

Santa Clara, Calif.-based Intel has for decades been closely and almost exclusively associated with the personal computer, but it is beginning to expand beyond the slow-growing PC market into the $200-billion consumer electronics industry.

Bertelsmann’s Arvato unit announced the launch last week of a new Internet platform, which it planned to sell to mobile phone operators, Internet providers and TV stations.


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