After months of intense wrangling between the competing Blu-ray and HD-DVD groups, the battle lines in the war over a next-generation high-definition DVD format have moved to the doorstep of Microsoft Corp.

Several industry sources last week told EE Times that Microsoft is muscling into the optical-disk fray by leveraging its operating-system clout to bundle HD-DVD within Vista, the company's next-generation OS. There is also talk that the software giant may be planning to offer cash incentives — in the form "coupons" — to system vendors or retailers if they agree to support HD-DVD. Such coupons would provide "credits" or "memos" for each PC that is sold with HD-DVD inside.

Many consumer electronics companies in the Blu-ray camp are scrambling to figure out, respond to and possibly preempt the next move by the world's largest — and richest — computer software maker. ...

One fact, however, is hard to miss: In the short span of two months, Microsoft has gotten through to Hewlett-Packard Co. HP, which still sits on the board of the Blu-ray Disc Association and previously supported the Blu-ray format exclusively, joined the HD-DVD Forum earlier this month. This semi-reversal came in the wake of a series of meetings with Microsoft, said Maureen Weber, general manager of HP's Personal Storage Business.