Yesterday, when Microsoft and Toshiba announced their enhanced partnership for Toshiba’s upcoming products, Bill Gates said Microsoft doesn’t necessarily favor one HD standard over the other, and the software maker would prefer to stay out of the competition. Today, however, Gates stated that Xbox 360, the company’s upcoming gaming console, would actually have HD-DVD drives.

Since the HD-DVD drives probably won’t be ready by the time Xbox 360 is available in retail channels, Microsoft said it would ship the console initially with regular DVD drives and then revise the console with HD-DVD drives once they are ready.

According to industry reports and analyst speculations, Microsoft may have an edge against Sony’s PlayStation 3 with more sales, since the company would have its Xbox 360 ready for shipment way before Sony, or even Nintendo.