Microsoft, Toshiba may tie Windows CE and HD-DVD

Microsoft Corp. and Toshiba Corp. have reached an agreement under which they will explore ways to use Microsoft Windows CE technology in new high-definition optical disc players, top executives of both companies said in Tokyo on Monday.

The agreement, which takes the form of a memorandum of understanding at present, will see the companies work on tying Windows CE or technologies from the operating system into HD-DVD players supporting iHD, an interactive system approved for the format that was originally proposed by Microsoft and The Walt Disney Co.

"Understanding how embedded software can fit to these products, how they can be easier to use, how they can connect up with a PC in very rich ways ... that's something that Toshiba and Microsoft will be able to explore together," said Bill Gates, chairman and chief software architect of Microsoft at a Tokyo news conference.

The agreement is partly a product of the broad patent cross-licensing agreement announced by Microsoft and Toshiba in April this year. With that deal signed, both companies can freely explore using the other's technology without the fear of infringing on patents or proprietary technology, said Amir Majidimehr, corporate vice president of the Windows Digital Media Group at Microsoft.

The companies declined to specify further details of the work, including whether it will be open to other companies.

HD-DVD is one of two duelling formats battling to become the de facto replacement for DVD for high-definition video. It was largely developed by Toshiba and NEC Corp., and first-generation players are expected to be available in the fourth quarter of this year along with movie discs. The rival format, Blu-ray Disc, is backed by Sony Corp. and a larger number of big-name consumer electronics companies, but won't be available until next year.

The work announced Monday by Toshiba and Microsoft is targeted at the second generation of HD-DVD players, said Toshiba. First-generation players due out later this year will include iHD but it will be based on a different and unspecified system.

The Blu-ray Disc format also has an interactive system, but it's based on Sun Microsystems Inc.'s Java technology.

Speaking of Microsoft's preference for one format over the other, Gates said the company is trying to remain neutral although he said Microsoft's close work with Toshiba has meant that it is working with the HD-DVD group.

"We are a member of the HD-DVD group along with Toshiba and others," he said. "At this stage, we're not a member of the equivalent Blu-ray group. We have taken a neutral position relative to the format but of course because of the strong dialog we have around the Windows CE-based player connecting up to Windows, we've benefitted from the strong relationship we have with Toshiba."

Asked about Microsoft's plans to include one of the two formats in its new Xbox 360 games console, Gates said the company could do that at some point in the future.

"The initial shipments of the Xbox 360 will be based on today's DVD format. We are looking at whether future versions of the Xbox will incorporate an additional capability of HD-DVD or something else. Adding a version that would have the extra capabilities is something that we would take a very hard look at."

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