Microsoft is said to be readying a handehld device and music service to compete with the iPod and iTunes Music Store. Following similar claims earlier this year, Reuters reports that the software giant has been privately demonstrating an entertainment device that plays videos and music. Microsoft has also reportedly held discussions with the music industry about licensing music for its own download service. A BusinessWeek report in January said Microsoft was “mulling its own digital device that adds gaming to music and video, in an effort to compete with Apple’s iPod empire.” The company was said to have reorganized its home entertainment and Xbox groups to better plan the device. In March, the Mercury News also reported that Microsoft was planning such a device.