Microsoft Corp and Toshiba Corp said they have agreed to jointly develop HD DVD players, giving the Japanese computer and consumer electronics maker a powerful new ally in its battle with Sony Corp and Matsush*ta Electric Industrial Co over technology standards for next-generation audio and visual products. In a statement issued in Tokyo, the companies said the agreement brings together Microsoft Windows CE technology and Microsoft's expertise in software and PC technologies, with Toshiba's expertise in consumer electronics and computing. The statement was issued just ahead of the start at 6 pm (0900 GMT) of a news conference in Tokyo by Microsoft chairman Bill Gates and Toshiba president Atsutoshi Nishida. Microsoft and Toshiba said they also plan to strengthen their collaboration in iHD, a next-generation DVD interactivity format. In April, the two companies concluded cross-licensing agreements in the fields of computer and digital home appliances. HD DVD is a newly developed high-definition digital video disc standard. It is competing with the Blu-ray disc technology to become the global standard for next-generation audio-visual products. Many leading consumer electronics and computer makers have already joined one camp or the other, and are aggressively courting content providers like movie studios to agree to make products using their next-generation technology. Japanese consumer electronics giants plan to begin selling later this year their next-generation DVD devices, billed as offering cinematic quality images and opening up new possibilities for interactive entertainment. The two systems are incompatible, making the situation reminiscent of the battle that erupted in the late 1970s when home videocassette players hit the market. By the 1980s, customers who had gambled on the Sony-developed Betamax had to switch to VHS, which became the standard. Computer and home appliance makers backing the Blu-ray technology include Apple Computer Inc, Dell Inc, Hewlett Packard Co and Samsung Electronics Co. Among the Hollywood studios, Walt Disney Co and Sony Pictures Entertainment Inc have pledged to back Blu-ray, while HD DVD supporters include Paramount Pictures, Universal Pictures and Warner Bros Studios. Some electronics firms, including Paris-based Thomson S.A., have said they plan to produce equipment for both standards. After three years of disagreement, the two blocs agreed in April to study a mutual standard that would avoid a scenario in which Sony discs do not work on Toshiba players or vice versa. But so far both sides have not been able to make any concessions. However, the Nihon Keizai Shimbun last week reported they may restart their efforts at working out a standard DVD format. Asked if the agreement today would have any impact on this move, Atsutoshi Nishida, president and CEO of Toshiba, said: "It's hard to answer that." Nonetheless, he noted that the two sides need to adopt a long-range view toward the establishment of a common standard, adding: "We must see things from our end-users' point of view." Microsoft's Bill Gates said the company remains "neutral" on the format battle.