Microsoft denies Blu-ray drive rumors, while Toshiba eats $1 billion

In an interview with Reuters, Microsoft shot down claims by Sony that the companies were in discussion to bring a Blu-ray drive to the Xbox 360. Meanwhile, Toshiba is expected to take a nearly $1 billion loss for abandoning HD DVD.

Microsoft's Aaron Greenberg, group product manager for the Xbox 360, said the company was focusing on digital distribution of entertainment through Xbox Live now that no more content is being produced for HD DVD. Microsoft halted production of its HD DVD add-on and discounted remaining units last month.

Toshiba is taking a major hit due to the cancellation of HD DVD, according to the Japanese business press service Nikkei. What was expected to be a few hundred million dollars in charges will now be closer to 100 billion yen, or $1 billion, due to higher production line changes and other costs related to pulling the plug on HD DVD.

Of course, Microsoft hasn't ruled out bringing Blu-ray to its game console in the future. "As the industry moves forward, we want to support Blu-ray. Toshiba's moved on, we've moved on. We'll support Blu-ray in ways that make sense," Microsoft CEO Steve Ballmer said at MIX 08 last week.

In the meantime, however, Microsoft has more important worries: supply problems. Sony's PlayStation 3 outsold the Xbox 360 in January, a change in fortune that company executives have blamed on not being able to produce enough consoles. This trend is expected to continue through April, and Sony will surely capitalize on being ahead of the Xbox 360 in sales for consecutive months.

NPD Group is expected to release February game console sales figures later today.

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