• Microsoft is paying Nokia $1 billion to develop and market Windows Phone 7 smartphones. In exchange, Nokia will pay Microsoft a fee for each copy of Windows Phone 7 used on its devices, and those costs will likely be offset as the company downsizes its internal software research and development spending. But the two still have a lot to prove. Nokia shares have dropped 26% since the relationship was announced last month, and Microsoft doesn’t seem to be faring that much better. According to new data from comScore, the latter’s share of the U.S. smartphone market slid 1.7% from October 2010 to January 2011, the first three months Windows Phone 7 was on the market. (Bloomberg and The Microsoft Blog)
• Western Digital will buy Hitachi Ltd.’s disk-drive business for about $4.3 billion in cash and stock. The move is yet another indication that the hard drive space is consolidating. Where once the market had dozens of suppliers, there are now only four. (Wall Street Journal)
  
• YouTube bought Next New Networks, a Web video production company, for less than $50 million, to shore up its efforts to eventually produce professional content, and the company may have recent hire Alex Carloss from YouTube’s content acquisition team to thank for the purchase. (Until last fall, Carloss worked as Paramount Picture’s head of digital distribution.) (New York Times and AllThingsD)

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  Troubled actor Charlie Sheen has a Twitter sponsor in online internship site Internships.com. To boot, he Tweeted to his 2 million-plus followers that he was looking for a social media intern and all interested candidates should apply via Internships.com. (Wall Street Journal)

• Starting today, Skype is introducing ads from companies like Visa, Disney, Microsoft and Volkswagen in preparation for its planned public offering later this year. The large-format ads will appear on the “home” tab of the Skype software and could feature video and interactive elements. Only users on Windows PCs in the U.S., the U.K. and Germany will see them. (Ad Age Digital)
• Beyond Oblivion, a music startup that has yet to launch, nabbed $77 million during a round of funding led by Rupert Murdoch’s News Crop and charity Wellcome Trust. Unlike most services, Beyond Oblivion will charge device makers a one-time fee to ship its software on their devices and then pay content owners every time a user plays a song via its software regardless of whether that song is stored in a user’s music collection or online. (Business Insider)
• Apple is reportedly reducing available in-store software titles and hardware peripherals to make more room for personal in-store setup services. (The Loop)
• Facebook appears to be slowly rolling out its updated Messages system, which includes an @Facebook email address for Facebook users/non-employees. After playing around with the updated service for a few minutes, it looks like new features include options to attach a file, take a photo, send a “quick reply,” send as a text message, and of course, send/receive emails from and to non-Facebook users as well. Message formatting (ie. bold, italicize, etc.) is seriously nonexistentBelow is a screengrab of what to expect. Besides the new format, check out the small icons at the bottom in the compose message area.

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