Microsoft Corp. today announced it has entered into a technology development agreement with ATI Technologies Inc. Under the agreement, ATI is developing custom, leading-edge graphics technologies for use in future Xbox products and services.

"We're combining Microsoft's vision, software experience and R&D resources with ATI's pioneering leadership in graphics technologies to create innovative future Xbox products and services that meet the lifestyle needs of consumers in the Digital Decade," said Robbie Bach, senior vice president of the Home and Entertainment Division at Microsoft. "We selected ATI after reviewing the top graphics technologies in development and determining that ATI's technical vision fits perfectly with the future direction of Xbox."