Microsoft and Toshiba are to move to strengthen an alliance that has seen them exchange innovations. The closer relationship may stretch as far the development of HD-DVD players and recorders using the Microsoft CE operating system.

“Microsoft values our strong relationship with Toshiba, a company we admire for its long-standing commitment to innovation,” said Bill Gates, chairman and chief software architect of Microsoft. “This agreement demonstrates our desire to share our innovations with other companies in ways that promote the spread of new ideas - and benefit customers by accelerating the development of exciting new products.”

Atsutoshi Nishida, president and CEO of Toshiba, who only took office last week, has already hit the headlines with his refusal to give up on a deal with Sony over a unfied next-generation DVD format. “We are very excited to take our long-standing partnership with Microsoft to the next level. Our companies have worked together since Toshiba launched the world’s first laptop PC back in 1985, and we enjoy a relationship rooted in mutual respect and understanding,” he said. “We look forward to extending the scope of our relations to encompass HD-DVD, a major driver of the next-generation consumer electronics.”

HD-DVD has been looking for a USP to compete with the fact that Blu-Ray will be built into the PlayStation 3. A deal with the world’s largest software manufacturer may be the first step in the right direction.

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