Pacific Microsonics, which makes digital music software, has developed a technology called High Definition Compatible Digital (HDCD), which corrects audio distortions that invariably occur during the digital recording process. According to Pacific Microsonics, compact discs that feature HDCD technology offer better sound than normal CDs, as do HDCD-enabled CD players.
Pacific Microsonics "has done amazing work to improve the sound quality of audio CDs," Will Poole, vice president of Microsoft's digital media division, said in a statement.
Microsoft plans to include the Union City, Calif.-based company's patented HDCD technology in future products for PCs and other consumer devices. Financial terms of the acquisition were not disclosed.
Last week, Microsoft acquired another Silicon Valley music company, MongoMusic, in a deal valued at $65 million.
The Redmond, Wash.-based software maker has shown a growing interest in digital music and PC-based entertainment, an area Microsoft has targeted with its recent products. Windows Me, its latest operating system for home PCs, includes new support for digital music, such as an updated version of the Windows Media Player.
Online music sales in the United States are expected to reach $5.4 billion by 2005, according to Jupiter Communications.
And in the past year, almost half of the PCs sold through retail stores included rewritable CD drives, according to market researcher PC Data. Rewritable CD drives allow people to create and burn their own CDs.
Pacific Microsonics, founded in 1986, currently licenses its technology to companies such as Kenwood and Toshiba, the company said.