Sony seems to be in talks with Microsoft about offering a Blu-ray drive for the Xbox 360, Steve Balmer almost admitted yesterday speaking in Las Vegas.

Microsoft's move was expected since Toshiba decided to stop advancing the HD DVD technology last month. Microsoft has backed Toshiba's HD-DVD format and offered an external HD-DVD drive that can be plugged into the 360.

In its Thusday afternoon keynote at MIX 08, Microsoft CEO Steve Ballmer said that the company moves on and supports Blu-ray.

"We've already been working on, for example, in Windows, device driver support for Blu-ray drives and the like, and I think the world moves on. Toshiba has moved on. We've moved on, and we'll support Blu-ray in ways that make sense."

Balmer's statement comes just one day after a Sony executive hinted that his company is in talks with console rival Microsoft about offering a Blu-ray drive for the Xbox 360, in an interview with Financial Times.

Microsoft did to confirm any talks, saying that they have not made any official move to Blu-ray.

A Blu-ray drive in a 360 would make Microsoft more competitive with the PS3, but it would also mean extra revenues for Sony?s electronics division.