Toshiba and Microsoft have always had a very tight relationship and the companies have been working together on developing computers and other mobile devices for several years, but it looks like this is not enough for the two giants.

The companies have decided to tighten their business relationship by issuing a cross-licensing agreement, according to which each of the two companies can use the other one's patents for the development of digital technologies. This agreement, which has been signed in May, has set the cornerstone for a successful future collaboration between Toshiba and Microsoft, as the companies' officials have announced on Monday.

The future benefits of this agreement have also been underlined by Toshiba President Atsutoshi Nishida at a news conference in Tokyo also attended by Microsoft Chairman, Bill Gates. "We think the agreement will have practical benefits such as lower costs and shorter development times," said Mr. Nishida.

It looks like Microsoft has finally chosen sides in the DVD format war, in spite of Gates' statement regarding Microsoft's current position of neutrality. Even if the idea of the two companies working together for the development of HD DVD players using Microsoft Windows software is just a project, it looks like it's not so far from the companies' real intentions.

As you probably know, Toshiba is backing the HD DVD format against its great rival Sony, who's supporting its own Blu-ray format. However, it's very difficult to predict the outcome of this battle, seeing that both sides still seem to be keeping some aces up their sleeves.