Ars Technica published an article about Microsoft's decision to back HD DVD

Few were surprised when Microsoft (along with Intel) announced that they would back HD DVD over Blu-ray. While Microsoft's stance on the next-generation of optical storage media was officially neutral, their close working relationship with Toshiba led us to suspect that HD DVD would get the nod. The interesting question is, why?

It has been said that Microsoft simply wouldn't back something put out by Sony, but that argument doesn't have traction. First, Microsoft's VC-1 video codec is supported by both Blu-ray and HD DVD; there's no strategic edge there to speak of. Additionally, over-emphasizing the competition between the PlayStation and the Xbox ignores the fact that Sony and Microsoft have a substantial working relationship. Witness Sony's line of Vaio computers, as well as Sony's Microsoft-DRM-backed music store.

Inside Microsoft's decision to back HD DVD