San Francisco - Microsoft (NASD: MSFT) is not in talks to include Sony (NYSE: SNE) Blu-ray high-definition DVD technology in its Xbox 360 video game console, according to Aaron Greenberg, group product manager for Xbox 360. Microsoft will, instead, continue to invest in the Xbox Live online service, which lets users rent movies, including ones in high-definition, over the Internet.

"Xbox is not currently in talks with Sony or the Blu-ray Association to integrate Blu-ray into the Xbox experience," Greenberg told Reuters in an interview.

The comments puts an end to recent speculation that Microsoft could support Blu-ray after Toshiba, backer of the rival HD DVD format, gave up when key movie studios and retailers abandoned the technology. Microsoft has already stopped production of its HD DVD Xbox Add-on.

Greenberg also revealed that supply problems for the Xbox 360 meant the machine was outsold in the U.S. market by Sony's Blu-ray equipped PlayStation 3 console in February for the second month in a row.

"We definitely expect we will trail in February as a result of our supply constraints," Greenberg said, adding: "By April, we will be in a very healthy inventory situation."

Joakim Baage

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