e.Digital will manufacture the device, which will integrate Lucent's Enhanced Perceptual Audio Coder with e.Digital's patented MicroOS file management system.

The device employs a new class of Digital Signal Processors (DSP) manufactured by Texas Instruments. Different from other handheld devices on the market, the device plays EPAC files instead of using the MP3 format.

"Our new DSP is a new class of processor for a new market," said Gary Johnson, worldwide manager of DSPs for Texas Instruments.

EPAC is a new version of the Perceptual Audio Coder developed by Lucent's Bell Labs. The coder is an audio compression algorithm with high-quality audio at the low bit rates. At 128 kilobits per second and a compression rate of 11 to 1, EPAC is said to be similar to CD-transparent stereo sound.

"The quality of the sound that we've heard with EPAC on our hardware platform is exceptional," said Fred Falk, CEO of e.Digital. "We know what people want in an Internet music download player; great sound in a compact device that's robust and well-priced. We are pleased to team with Lucent and Texas Instruments to provide a high-quality, secure solution for the exploding Internet music market."

"We are taking the current generation of hand-held players to the highest levels of audio quality and design," said Joyce Eastman, director of audio for Lucent's New Ventures Group. "We have produced what we believe will be a solid design for an EPAC player that offers high levels of security with excellent sound quality."

Lucent said it is working in tandem with the recording industry and is a member of the Secure Digital Music Initiative (SDMI), the industry group responsible for developing an open, secure access system for digital music.